Schroders PLC’s (LON:SDR) underlying profits fell in 2019 but the asset manager reported record levels of new business after forming a new wealth management joint venture and restructuring its investment business.
The group’s structural changes were designed to realign the business towards areas of expected future growth such as China and wealth management, plus the £90.6mln acquisition of sustainable investment-focused manager BlueOrchard.
In wealth management, the new joint venture with Lloyds Banking Group led to the creation of Schroders Personal Wealth and saw £12.6bn of client investments transferred over, while another £32bn inflow came from Lloyds moving its Scottish Widows mandate to the fund manager.
As a result, assets under management closed the year up 23% at a new high of £500.2bn after net inflows of £43.4bn, which compared to a previous year that saw net outflows of £9.5bn.
Net income for the year was flat at £2.1bn, with profit before tax and exceptionals fell 8% to £701mln.
The total dividend was kept flat at 114p per share.
“We are pleased that the structural changes we have made in our business have delivered a resilient performance,” said chief executive Peter Harrison, saying the re-positioning results in more than half of assets under management now coming from these new areas of focus.
On the effect of the coronavirus outbreak, he added: “In the near term, Covid-19 is creating considerable uncertainty for economies and markets. We believe that our business resilience is sufficient to deal with this, but the impact on economies and markets will be highly correlated with how effective containment measures are.”
Schroders shares fell 2% to 2,834p by mid-morning on Thursday.
Analysts at UBS said second-half adjusted profits of £361mln were down 1% year-on-year but up 6% on the first half and 5% better than consensus forecasts, driven by revenues being better than expected due to better performance fees.
The analysts noted that profits from the Asset Management are of £315mln in the second half were 5% better than expectations while the £44mln from Wealth Management was 8% lower.
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