Transformational year for private wealth manager following key acquisition
Rathbones Group’s acquisition of Investec Wealth and Investment (IW&I) last year is driving the business forward, it said in announcing its preliminary results for the year to December 31, 2023, today.
Looking forward, it also predicted the expected fall in interest rates will be positive for equity markets and increase client confidence to invest.
The private wealth manager, with a key base at the Port of Liverpool Building on the Liverpool waterfront, revealed that operating income rose to £571.1m, compared with £455.9m the previous year, however, pre-tax profits fell from £64.1m in 2022, to £57.6m, largely reflecting acquisition and integration costs related to the combination with IW&I, along with higher amortisation charges following the deal.
Underlying profit before tax increased 30.9% to £127.1m (2022: £97.1m), including a £25.4m contribution from IW&I in the final quarter.
Total Funds Under Management (FUMA) reached £105.3bn, against £60.2bn last year, including £42.2bn from IW&I.
Group chief executive, Paul Stockton, said: “2023 was a transformational year for Rathbones as we announced our combination with Investec Wealth & Investment (IW&I).
“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.
“Underlying profit before tax increased 30.9% to £127.1m, including contribution from IW&I in the final quarter.
“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.”
He added: “We remain resilient and well positioned to withstand some of the challenging investment market conditions we saw this year and our 2023 results reflect this.
“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.”
Looking ahead, he said: “Whilst we will continue to be impacted by market reactions to political instability or adverse geopolitical events, as a strong business with increased scale, Rathbones is well equipped to manage and navigate these challenges.
“Recent indicators that interest rates may fall in the medium term should be positive for equity markets and increase client confidence to invest. This, in turn, should be positive for net organic growth rates and the group as a whole.”
Investment bank, Panmure Gordon, maintained its ‘Hold’ call on Rathbones stock following today’s announcement.
Analysts Rae Maile and Ross Luckman, said: “Profits in 2023 were a touch ahead of our estimates with the core Rathbones business ‘in line’ and Investec a little better.
“The company’s guidance for margins in the current year is more cautious than before, now mid-20s% rather than high-20s%, because of further ‘investment’, ‘the time required to complete the migration of Saunderson House clients’ and inflation.
“Inflation can be expected to moderate but is not something which the company can control. Investment is an ongoing refrain and the integration of Investec is presumably a much larger challenge than Saunderson House was. The company’s confidence in achieving its 30% margin target may not be widely shared.”
