Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Funds under Management and Administration (FUMA) increased by 3.7% to EUR109.2 billion, reflecting market-driven growth in asset values.
- Operating income grew 57% to GBP895.9 million, driven by the full-year contribution from Investec Wealth and Investment (IW&I) and underlying growth across all principal income streams.
- Underlying profit before tax grew 79% to GBP227.6 million, reflecting IW&I's full-year contribution and synergy delivery.
- The integration of Saunderson House has enhanced Rathbones Group PLC (RTBBF, Financial)'s financial planning capability alongside its investment teams.
- The company is on track to achieve its synergy target of GBP60 million, with GBP30.1 million already delivered by the end of 2024.
Negative Points
- Gross outflows remained elevated due to high interest rates and cost of living, resulting in higher levels of partial withdrawals from existing portfolios.
- The integration process of IW&I has led to short-term increases in technology costs and other operating expenses.
- The asset management segment's fee and commission margin showed a small decrease due to a shift towards multi-asset funds with lower annual management charges.
- The company faces headwinds from increased National Insurance Contributions (NIC) and FSCS levies, impacting cost management.
- Despite progress, the full realization of synergies and margin improvements is expected to be weighted towards the 2026 financial year, indicating slower short-term financial benefits.
Q & A Highlights
Q: How should we think about the mix of planners and investment managers changing going forward, and is there scope to build out the planning capacity further?
A: R. Paul Stockton, CEO: The industry is moving towards a blend of investment and advice solutions. We anticipate an emerging class of advisors focusing more on wealth planning. The mix will change significantly over the next five years, with a focus on integrating investment management, financial planning, and wealth planning.
Q: Is it reasonable to expect that we'll hear the results of the capital review with the half-year results?
A: Iain Hooley, CFO: We will conclude our capital priorities once the integration is complete and the business is in a steady state. We aim to provide more information on our priorities at the half-year, but a full conclusion may not be reached by then.
Q: Has there been any change in client sentiment since the UK budget, particularly regarding partial withdrawals from existing accounts?
A: R. Paul Stockton, CEO: The UK budget generated fear and discussion, but the lasting effect is a focus on advice conversations. Clients are more aware of the need to plan, which aligns with our product launches. The sentiment is generally one of relief, but there's an awareness of potential future tax changes.
Q: How competitive is the multi-asset offering against the crowded MPS space?
A: Tom Carroll, CEO of Rathbones Asset Management: About 50% of assets in the multi-asset solution are internal and 50% external. The offering is competitive, ranking highly in multi-asset sales. We are committed to the active space for an MPS solution and are exploring opportunities in this area.
Q: How do you view buybacks in the context of the capital framework, given the current valuation?
A: Iain Hooley, CFO: We will consider potential returns of capital as part of our comprehensive capital allocation review. If returning capital to shareholders is deemed appropriate, we will explore options such as buybacks or dividends, taking into account shareholder preferences.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
