Rathbones sees higher outflows as Investec Wealth merger ‘progressing well’

Rathbones' funds under management and administration came in at £105.3bn, compared with £60.2bn in 2022. This figure included £42.2bn from IW&I.

Fund manager Rathbones has said its landmark merger with Investec Wealth & Investment (IW&I) is “progressing well” as it posted higher outflows and a dip in profits.

Investec announced in April that its wealth and management division would combine with Rathbones in a £839m tie-up.

Rathbones’ profit before tax fell 10 per cent to £57.6m last year, from £64.1m in 2022, which it said was mainly due to acquisition and integration costs.

Its underlying profit before tax swelled 31 per cent to £127.1m, with this figure including a £25.4m contribution from IW&I in the final quarter of 2023.

Rathbones’ funds under management and administration came in at £105.3bn, compared with £60.2bn in 2022. This figure included £42.2bn from IW&I.

Rathbones said the merger was “progressing well”, with it expecting to fully migrate clients onto its platform in early 2025.

UK fund managers suffered from heavy outflows last year as clients grappled with inflationary pressures and higher interest rates.

Rathbones’ outflows came in at £7.4bn in 2023, compared with £6.1bn in 2022, with inflows excluding IW&I rising £400m to £6.9bn.

The firm said that it had stayed “resilient” compared to the wider sector, moving from eighth to fifth in total net retail sales in the UK last year.

Rathbones’ earnings per share fell to 52.6p from 83.6p. On an underlying basis, this figure ticked up to 135.8p from 130.8p.

The board has recommended a final dividend of 24p for 2023, compared with 56p in 2022. The total dividend for the year has risen to 87p from 84p.

Rathbones posted underlying operating expenses of £444.0m, up 24 per cent from £358.8m in 2022. It said the increase was driven by merger costs, including staff pay and bonuses.

Rathbones chief executive Paul Stockton called 2023 a “transformational year”. He said: “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.”

Stockton 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.”