TIDMRAT
RNS Number : 5827Q
Rathbones Group PLC
19 October 2023
Rathbones Group Plc
third quarter trading update
Rathbones Group Plc ("Rathbones") announces a trading update for
the three months ended 30 September 2023.
Paul Stockton, Group Chief Executive of Rathbones, said:
"In September we were delighted to announce the completion of
our combination with Investec Wealth and Investment UK
("IW&I"), welcoming new clients and colleagues into the
Rathbones group. There is already a strong level of collaboration
across the enlarged group and an ongoing dedication to keeping
clients' interests at the forefront of everything we do.
We delivered net inflows in wealth management in the quarter in
spite of a market backdrop that remains challenging and higher
outflows as clients use funds to repay debt or prefer to hold
assets in cash for the short term. We continue to engage
meaningfully with our clients, tailoring our propositions to
support their needs. In accordance with consumer duty, both
Rathbones and IW&I are committed to acting in the best
interests of clients and we remain priced competitively in the
market.
The scale that Rathbones now has positions us strongly to
navigate current conditions successfully. We are confident in
delivering the synergies associated with the IW&I transaction,
together with our 2023 and 2024 operating margin guidance for the
enlarged Rathbones group."
Given the combination with IW&I completed only a few days
before the end of the third quarter, the commentary below refers to
Rathbones, excluding iW&I, except where otherwise stated. We
look forward to providing more detail on the performance of the
enlarged group in our full year results.
Financial and business highlights:
- Total funds under management and administration ("FUMA"),
including IW&I, were GBP100.7 billion at 30 September (30 June
2023: GBP60.5 billion, 31 December 2022: GBP60.2 billion).
- GBP45.4 billion in the Investment Management business (30 June
2023: GBP45.4 billion, 31 December 2022: GBP45.1 billion).
- GBP12.5 billion in the Rathbone Funds business (30 June 2023:
GBP12.2 billion, 31 December 2022: GBP11.0 billion).
- GBP2.0 billion in Saunderson House (30 June 2023: GBP2.9
billion, 31 December 2022: GBP4.1 billion).
- GBP40.8 billion in Investec W&I.
- Discretionary and managed net inflows were GBP0.1 billion (Q3
2022: GBP0.4 billion) in the quarter to 30 September 2023,
representing an annualised growth rate of 1.2% (Q3 2022: 3.3%). As
we reported in our interim results, we continued to see strong
levels of gross inflows (GBP1.2 billion in the quarter) albeit that
these were largely offset by a continued trend in elevated outflows
that reflect current conditions.
- Investment performance in our discretionary bespoke service
lagged the MSCI PIMFA balanced index in the quarter (-0.8% compared
with +0.6%). Year to date group performance remains positive,
benefitting in particular from the strong performance in our global
opportunities and ethical bond funds.
- Underlying net operating income was GBP120.4 million for the
three months ended 30 September 2023, an increase of 6.5% from the
GBP113.0 million for the three months ended 30 September 2022.
- Fee income and commission in Investment Management totalled
GBP78.5 million (Q3 2022: GBP79.6 million).
- Net interest income increased to GBP13.3 million from GBP5.6
million in Q3 2022 and we continue to pay competitive rates to our
clients.
- Fees from advisory services and other income reduced to
GBP11.0 million (Q3 2022: GBP12.4 million) reflecting the expected
reduced time-based charges during the Saunderson House transition,
offset by continuing growth in Vision and Rathbone Financial
Planning revenues. The migration of clients and FUMA from
Saunderson House is progressing well, with c.GBP1.8 billion of FUMA
transferred in the year to 30 September 2023. We continue to expect
the migration to be completed by the end of the first quarter of
2024, achieving an incremental revenue margin of c.55bps across the
group.
- Fee income in our funds business totalled GBP17.6 million (Q3
2022: GBP15.4 million) reflecting strong inflows of GBP934 million
from the Saunderson House migration.
- We continue to expect to launch the first phase of our Client
Lifecycle Management (CLM) system in the first quarter of 2024,
with further phases expected to be made throughout the remainder of
that year. Total expected operating expenses of our digital
programme have increased by GBP5 million to GBP45 million, of which
around GBP15 million will be incurred in 2024.
Full year results 2023
Results for the 12 months to 31 December 2023 will be announced
on 6 March 2023.
Detailed financial information
Net operating income
3 months ended 30 9 months ended 30
September September
2023 2022 Change 2023 2022 Change
Investment Management (GBPm) (GBPm) (%) (GBPm) (GBPm) (%)
* Fees 69.0 67.5 2.2 207.8 206.9 0.4
* Commissions 9.5 12.1 (21.5) 33.2 39.0 (14.9)
* Net interest income 13.3 5.6 137.5 35.6 11.6 206.9
* Fees from advisory services(1) & other income 11.0 12.4 (11.3) 32.0 40.3 (20.6)
------------------------------------------------------ ------- ------- ------- -------- -------- -------
102.8 97.6 5.3 308.6 297.8 3.6
------------------------------------------------------ ------- ------- ------- -------- -------- -------
Rathbone Funds 17.6 15.4 14.3 49.8 47.1 5.7
------------------------------------------------------ ------- ------- ------- -------- -------- -------
Net operating income 120.4 113.0 6.5 358.4 344.9 3.9
------------------------------------------------------ ------- ------- ------- -------- -------- -------
MSCI PIMFA Private Investor
Balanced Index on principal
charging dates(2) 1,703 1,606 6.0 1,699 1,692 0.4
1. Including income from trust, tax, financial planning
services, Vision Independent Financial Planning and Saunderson
House.
2. The principal charging dates for Investment Management
clients are 5 April, 30 June, 30 September and 31 December.
Rathbone Funds income accrues on daily levels of funds under
management.
Funds under management and administration
(i) Breakdown of FUMA and flows by service level
Gross Gross Service
Opening Inflows Outflows Net Level SHL Migrated Closing Ann Net
FUMA Flows Transfers(3) Assets FUMA Growth(4)
(GBPm) (GBPm) Market
& investment
Q3 ended 30 September Performance
2023 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Discretionary service 45,302 976 (926) 50 (73) 839 (413) 45,705
Bespoke portfolios 42,711 883 (866) 17 (138) 441 (401) 42,630 0.2
Managed via
in-house
funds 2,591 93 (60) 33 65 398 (12) 3,075 5.1
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Multi-asset funds 2,278 216 (129) 87 - - (20) 2,345 15.3
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total discretionary
& managed 47,580 1,192 (1,055) 137 (73) 839 (433) 48,050 1.2
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Non-discretionary
service 743 11 (27) (16) (1) - 6 732 (8.6)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total wealth
management 48,323 1,203 (1,082) 121 (74) 839 (427) 48,782 1.0
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Single-strategy funds 6,520 271 (442) (171) - - (36) 6,313 (10.5)
Execution only &
banking 2,555 92 (141) (49) 74 2 12 2,594 (7.7)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Group (pre
acquisitions) 57,398 1,566 (1,665) (99) - 841 (451) 57,689 (0.7)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Saunderson House(5) 3,135 25 (163) (138) - (841) 55 2,211 (17.6)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total group (pre
acquisitions) 60,533 1,591 (1,828) (237) - - (396) 59,900 (1.6)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Investec W&I - - - - - - - 40,781 -
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total for enlarged
group - - - - - - - 100,681 -
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Gross Gross Service Ann
Opening Inflows Outflows Net Level SHL Migrated Closing Net
FUMA Flows Transfers(3) Assets FUMA Growth(4)
(GBPm) (GBPm) Market
& investment
9 months ended 30 Performance
September 2023 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Discretionary
service 44,322 3,057 (2,943) 114 (273) 1,761 (219) 45,705
Bespoke
portfolios 42,894 2,754 (2,777) (23) (853) 827 (215) 42,630 (0.1)
Managed via
in-house
funds 1,428 303 (166) 137 580 934 (4) 3,075 12.8
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Multi-asset funds 2,159 616 (431) 185 - - 1 2,345 11.4
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Total discretionary
& managed 46,481 3,673 (3,374) 299 (273) 1,761 (218) 48,050 0.9
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Non-discretionary
service 757 29 (53) (24) (13) 2 10 732 (4.2)
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Total wealth
management 47,238 3,702 (3,427) 275 (286) 1,763 (208) 48,782 0.8
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Single-strategy
funds 6,474 976 (1,426) (450) - - 289 6,313 (9.3)
Execution only &
banking 2,404 240 (377) (137) 286 - 41 2,594 (7.6)
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Group (pre
acquisitions) 56,116 4,918 (5,230) (312) - 1,763 122 57,689 (0.7)
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Saunderson House(5) 4,117 103 (397) (294) - (1,763) 151 2,211 (9.5)
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Total group (pre
acquisitions) 60,233 5,021 (5,627) (606) - - 273 59,900 (1.3)
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Investec W&I - - - - - - - 40,781 -
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
Total for enlarged
group - - - - - - - 100,681 -
------------------- -------- -------- --------- -------- ------------ ------------- ------------ -------- ---------
(ii) Breakdown of Rathbones Investment Management FUMA and flows
by channel
Gross Gross Service
Opening Inflows Outflows Net Level SHL Migrated Closing Ann Net
FUMA Flows Transfers(3) Assets FUMA Growth(4)
(GBPm) (GBPm) Market
& investment
Q3 ended 30 September Performance
2023 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total direct 33,333 605 (676) (71) (30) - (284) 32,948 (0.9)
Total financial
adviser
linked 11,969 371 (250) 121 (43) 839 (129) 12,757 4.0
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total discretionary
service 45,302 976 (926) 50 (73) 839 (413) 45,705 0.4
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Execution only &
banking 2,555 92 (141) (49) 74 2 12 2,594 (7.7)
Non-discretionary
service 743 11 (27) (16) (1) - 6 732 (8.6)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total Investment
Management 48,600 1,079 (1,094) (15) - 841 (395) 49,031 (0.1)
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Investec W&I - - - - - - - 40,781 -
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total Investment
Management
for enlarged group - - - - - - - 89,812 -
---------------------- -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Gross Gross Service Ann
Opening Inflows Outflows Net Level SHL Migrated Closing Net
FUMA Flows Transfers(3) Assets FUMA Growth(4)
(GBPm) (GBPm) Market
& investment
9 months ended 30 Performance
September 2023 (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (GBPm) (%)
------------------ -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total direct 33,639 1,962 (2,232) (270) (226) - (195) 32,948 (1.1)
Total financial
adviser
linked 10,683 1,095 (711) 384 (47) 1,761 (24) 12,757 4.8
------------------ -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total
discretionary
service 44,322 3,057 (2,943) 114 (273) 1,761 (219) 45,705 0.3
------------------ -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Execution only &
banking 2,404 240 (377) (137) 286 - 41 2,594 (7.6)
Non-discretionary
service 757 29 (53) (24) (13) 2 10 732 (4.2)
------------------ -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total Investment
Management 47,483 3,326 (3,373) (47) - 1,763 (168) 49,031 (0.1)
------------------ -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Investec W&I - - - - - - - 40,781 -
------------------ -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
Total Investment
Management for
enlarged
group - - - - - - - 89,812 -
------------------ -------- -------- --------- -------- ------------ ------------ ------------ -------- ---------
3. Service Level Transfers represent client FUMA which has
transferred from one service to another within the group during the
period.
4. Annualised net growth in flows calculated as net
flows/opening FUMA.
5. Total funds under advice by Saunderson House, including those
clients transferred to fellow group companies totalled GBP4.11
billion at 30 September 2023 (30 September 2022: GBP4.15
billion).
(iii) Total Group FUMA
At 30 September At 30 June
-------------------------------------- ------------------------ ---------------
2023 2022 Change 2023 Change
GBPm GBPm % GBPm %
-------------------------------------- ------- ------- ------ ------- ------
Rathbones Investment Management
Gross FUMA 49,031 45,557 7.6 48,600 0.9
Of which: invested in Rathbones
Funds discretionary wrapped funds(6) (3,631) (2,403) 51.1 (3,169) 14.5
Rathbone Funds 12,547 10,624 18.1 12,165 3.1
Saunderson House 2,211 4,151 (46.7) 3,135 (29.5)
Of which: invested in Rathbones
Funds discretionary wrapped funds(7) (246) - - (198) 24.2
-------------------------------------- ------- ------- ------ ------- ------
Total Group FUMA 59,912 57,929 3.4 60,533 (1.0)
-------------------------------------- ------- ------- ------ ------- ------
Investec W&I 40,781 - - - -
Of which: invested in Rathbones
Funds discretionary wrapped funds(8) (12)
-------------------------------------- ------- ------- ------ ------- ------
Total Group FUMA for enlarged group 100,681 - - - -
-------------------------------------- ------- ------- ------ ------- ------
6. Discretionary wrapped funds represent funds operated by
Rathbone Funds, managed by both Rathbone Investment Management
teams and Rathbone Funds managers.
7. Discretionary wrapped funds represent funds operated by
Rathbone Funds, managed by both Saunderson House teams and Rathbone
Funds managers.
8. Discretionary wrapped funds represent funds operated by
Rathbone Funds, managed by both Investec W&I teams and Rathbone
Funds managers.
The MSCI PIMFA Private Investor Balanced Index closed at 1,711
on 17 October 2023, an increase of 0.5% since 30 September 2023.
Investment Management fee income in the fourth quarter is dependent
upon the value of funds under management at 31 December 2023.
19 October 2023
For further information contact:
Rathbones Group Plc
Paul Stockton, Group Chief Executive Officer
Jennifer Mathias, Group Chief Financial Officer
Sarah Lewandowski, Head of Investor Relations
Tel: 07702605524
Email: sarah.lewandowski@rathbones.com
Camarco
Ed Gascoigne-Pees
Julia Tilley
Tel: 020 3757 4984
Email: ed.gascoigne-pees@camarco.co.uk
Rathbones Group Plc
Rathbones provides individual investment and wealth management
services for private clients, charities, trustees and professional
partners. We have been trusted for generations to manage and
preserve our clients' wealth. Our tradition of investing and acting
for everyone's tomorrow has been with us from the beginning and
continues to lead us forward.
Rathbones has over 3,300 employees in 23 locations across the UK
and Channel Islands; its headquarters is 8 Finsbury Circus, London,
EC2M 7AZ.
www.rathbones.com
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