Schroders sees profits increase in first quarter

published 2 May 2013

Schroders achieved a rise in pre-tax profits in the first quarter boosted by growth in assets under management (AuM).

The British fund manager's pre-tax profit came to £115m for the first three months of the year, up from the previous year's £95.5m, as net inflows rose to £5.6bn from £1.6bn. AuM increased to £236.5bn from ££250.8, including performance fees of £2.8m.

"It has been a strong quarter and these results reflect the benefit of our diversified business," said Chief Executive, Michael Dobson.

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"Competitive investment performance led to net inflows in institutional and intermediary and across all asset classes and regions."

He said the company has continued to expand the business in the UK and internationally, including the proposed acquisition of Cazenove Capital to strengthen its private banking arm.

Private banking net revenue for the quarter fell year-on-year to £26.5m from £27.1m and pre-tax profit dropped to £4.9m from £6.4m.

Cazenove had AuM of £19.1bn at the end of March which Schroders hopes will bolster business.

Last month the company also completed the acquisition of STW Fixed Income, a US investment-grade fixed income manager with AuM at March 31st of £7.3bn.

During the period, Head of UK Investment Richard Buxton announced he was leaving to join rival company Old Mutual. Buxton, one of the UK's top fund managers, will step down in June after 11 years at the company. It came as a serious blow to Schroders as Buxton runs more than £4.0bn for the group.

Nevertheless, the company expects performance to continue to improve throughout the year.

"We saw significant retail investor demand in the first quarter on the back of buoyant equity markets," the firm said in a statement.

"While we do not expect demand to continue at this level, we remain well placed for continued growth in Intermediary and Institutional and we see good potential in private banking and wealth management through the combination with Cazenove Capital."

The share price fell 1.38% to 2,293p by 08:40 on Thursday.