Rathbones revenue rises as it integrates acquisitions

Rathbones Group reported substantial growth in funds under management and administration (FUMA) in its preliminary results for 2023 on Wednesday, rising to £105.3bn from £60.2bn year-on-year, fueled largely by the acquisition of Investec Wealth & Investment UK (IW&I).

The FTSE 250 company said that also drove a 30.9% increase in underlying profit before tax to £127.1m, although overall profit before tax declined 10.1% to £57.6m due to costs associated with the acquisition and integration process.

It reported positive progress in merging operations with both IW&I and Saunderson House.

Client migration processes were underway, with further progress expected throughout 2024.

The company said it was continuing to invest in its digital programme, with a new client lifecycle management system set to launch by mid-2024, though slightly behind the original schedule.

Looking ahead, Rathbones acknowledged the potential impact of global economic and political instability, but said it believed its increased scale positioned it well to navigate such challenges.

While near-term profit margins were expected to be in the mid-20 percentage points, possibly due to ongoing digital investment and inflationary pressures, the company maintained a long-term target of 30%+ operating margins.

The board recommended a final dividend of 24p for 2023, bringing the total dividend to 87p for the year.

That represented a 3.6% increase over 2022.

“2023 was a transformational year for Rathbones as we announced our combination with Investec Wealth & Investment (IW&I),” said group chief executive officer Paul Stockton.

“Our integration programme is progressing well and, having spent considerable time with many new colleagues this year, I am confident that we have brought together a group of like-minded teams who are excited about the opportunities the combination provides our enlarged group.

“Together, we will secure the planned synergies from scale, and provide stability to clients and colleagues, whilst offering enhanced propositions that will benefit our clients and deliver value to shareholders.”

Stockton said the company remained “resilient and well positioned” to withstand some challenging investment market conditions seen this year.

“Our priority has always been to provide the reassurance and support that our clients expect over such periods, and as ever, they will remain a key consideration in everything that we do.”

At 0843 GMT, shares in Rathbones Group were up 0.55% at 1,558.5p.

Reporting by Josh White for Sharecast.com.