REG - Rathbones Group PLC - First Quarter Trading Update

RathbonesAnnouncement

Thu 07:01

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RNS Number : 7491H  Rathbones Group PLC  08 May 2025

Rathbones Group Plc

first QUARTER TRADING UPDATE

Rathbones Group Plc ("Rathbones" or the "Group") announces a trading update
for the three months ended 31 March 2025

Paul Stockton, Group Chief Executive Officer of Rathbones, said:

"Rathbones reached a major milestone in April 2025, successfully migrating 90%
of Investec Wealth & Investment (IW&I) client accounts onto the
Rathbones platform. This marks significant progress in the integration of
IW&I and, while there is still work to do, the Group remains on track to
complete the migration of remaining clients by the end of the second quarter
as planned.

In a quarter that witnessed some considerable market turbulence, the Group saw
net outflows, primarily due to a lower level of gross inflows as the final
stages of the migration process impacted IW&I in particular. Rathbones
Asset Management's single strategy funds and multi-asset funds saw elevated
outflows as a result of ongoing market volatility. This reflected the broader
industry trend of weaker flows into equity, fixed interest and multi-asset
funds, with flows leaning more towards money-market funds in the quarter.

 

Market volatility reinforces the enduring value of long-term, relationship-led
wealth management, and creates opportunities for asset managers, but sustained
volatility can also impact revenue and profitability. Wealth management FUMA
valuations and fee income calculations at the end of the quarter coincided
with a moment of particular market weakness. This heightens the need for our
ongoing cost discipline, and whilst we continue to invest to support growth
opportunities and deliver synergy benefits, we will be looking to manage
operational cost levels actively to mitigate these effects on profitability as
much as possible.

The foundations for future growth are strong, and I look forward to welcoming
Jonathan Sorrell when he joins us in July, securing a smooth leadership
transition that continues to support our clients and colleagues as we look
towards the next chapter for the Group."

Financial highlights:

-   FUMA declined 4.7% to £104.1 billion at the quarter end (31 December
2024: £109.2 billion). This comprised Rathbones Investment Management (RIM)
FUMA at 4 April and FUMA for the remainder of the Group at 31 March and
reflected market volatility.

-    £88.7 billion in the Wealth Management segment (31 December 2024:
£93.4 billion).

-    £15.4 billion in the Asset Management segment (31 December 2024:
£15.8 billion).

-    Over 50% of Wealth Management fees were billed on 4 April, when
markets had fallen approximately 4.6% since 31 March.

-   Gross inflows totalled £2.7 billion in the first quarter (Q4 2024:
£3.2 billion), reflecting the impact of the focus on migration activity,
which was at its peak during the quarter. Outflows totalled £3.5 billion (Q4
2024: £3.4 billion) in the period.

-    Net inflows in RIM discretionary & managed propositions remained
positive in the first quarter at £62 million, (Q4 2024: £395 million),
representing an annualised growth rate of 0.4% for the quarter. Outflows
included a large lower margin account.

-    Net outflows in Investec Wealth & Investment UK (IW&I)
remained consistent at £425 million (Q4 2024: net outflows of £409 million),
as the reduction in gross inflows was offset by a reduction in IW&I's
gross outflows of 15.5% relative to Q4 2024.

-    Single strategy funds within the Asset Management segment, which was
already facing a challenging market for active managers, were further affected
by recent market turmoil, resulting in net outflows of £265 million in the
first quarter (Q4 2024: outflows of £98 million). This was despite
performance in our largest funds remaining in the first or second quartile
across 1, 3 and 5 years.

-   Despite the challenging market backdrop, the Group's total operating
income remained resilient, totalling £220.1 million for the quarter (Q1 2024:
£223.6 million). While there was a decline in fee-based income, this was
primarily driven by market volatility at the time of client billing. As
anticipated, transaction-based commission income in March 2025 was notably
flatter than normal, reflecting a more muted seasonal spike due to the higher
level of client portfolio activity that arose ahead of the 2024 Autumn Budget.
Net interest income grew modestly; however, income for the first quarter does
not reflect the contribution from IW&I interest income relating to client
money deposits, which remained within other income for Q1 and will be
recognised as net interest income, along with the related revenue synergy
disclosed previously, from the point of migration of client assets in Q2.

- Synergy delivery has increased to £30.4 million per annum on an annualised
run-rate basis, with the majority of the remaining cost synergies expected to
materialise in H2, following the completion of the migration in H1.

AGM and Interim results dates:

Annual General Meeting

The Annual General Meeting (AGM) will be held today, 8 May, at 9:00am at our
London head office at 30 Gresham Street, London, EC2V 7QN. Similar to last
year, the Board has made arrangements to enable members to attend and
participate in the meeting electronically should they wish to do so.
Instructions on how to attend and participate electronically are set out in
the Notice of AGM.

 

Interim results

The interim results for the six months to 30 June 2025 will be announced on 30
July 2025.

 

 

 

Detailed financial information:

Net Operating Income

                                                                                 3 months ended 31 March
                                                            2025                                    2024                                        Change
 Wealth Management                                          (£m)                                    (£m)                                        (%)
 - Fees                                                     137.1                                   141.2                                       (2.9)
 - Commissions                                              24.3                                    25.0                                        (2.8)
 - Net interest income                                      16.1                                    15.9                                        1.3
 - Fees from advisory services                              14.7                                    14.4                                        2.1
 - Other income(1)                                          6.9                                     7.5                                         (8.0)
                                                            199.1                                   204.0                                       (2.4)
 Asset Management                                           21.0                                    19.6                                        7.1
 Net operating income                                       220.1                                   223.6                                       (1.6)

 MSCI PIMFA Private Investor Balanced Index on 31 March(2)  1,908                                   1,866                                       2.3
                                                                             1,821                                     1,853                                          (1.7)

 MSCI PIMFA Private Investor Balanced Index on 4 April(2)

 

1. Including interest income on client money deposits of £6.3 million (Q1
2024: £6.6 million) mainly relating to IW&I.

2. IW&I billed first quarter fees on 31 March 2025 (2024 fees were billed
on 29 February when the MSCI PIMFA Private Investor Balanced Index was 1,815).
The principal billing date for RIM clients for the quarter was at the close of
business on 4 April 2025 (2024: 5 April). The charging dates for the remaining
quarters of 2025 are now aligned. Rathbones Asset Management (RAM) calculates
its charges on a daily basis and FUMA is shown as at 31 March.

Funds under management and administration

(I) Segment fuma

 Quarter ended 31 March & 4 April 2025      Wealth Management  Asset Management  Intra-group holdings  Group FUMA

(£m)

(£m)
                                                               (£m)              (£m)
 Opening FUMA                               99,309             15,751            (5,896)               109,164
 Gross Inflows                              2,252              826               (354)                 2,724
 Gross Outflows                             (2,720)            (1,050)           262                   (3,508)
 Net Flows                                  (468)              (224)             (92)                  (784)
 Market & Investment Performance            (4,354)            (137)             163                   (4,328)
 Closing FUMA                               94,487             15,390            (5,825)               104,052

 

(Ii) Breakdown of FUMA and flows by service level

 Quarter ended 31 March & 4 April 2025      Opening FUMA  Gross Inflows  Gross Outflows  Net Flows  Transfers(3)  IW&I Migrated Assets      Market & Investment Performance (£m)       Closing FUMA  Ann Net Growth(4)

(£m)

(£m)
(£m)

(£m)
(%)
                                                          (£m)           (£m)                                     (£m)
 Rathbones Investment Management            52,900        1,470          (1,357)         113        19            222                       (3,090)                                    50,164        0.9
 Bespoke portfolios                         47,801        1,285          (1,240)         45         (73)          222                       (2,961)                                    45,034        0.4
 Managed via in-house funds                 5,099         185            (117)           68         92            -                         (129)                                      5,130         5.3
 Multi-asset funds(5)                       3,093         158            (209)           (51)       -             -                         83                                         3,125         (6.6)
 Rathbones discretionary & managed          55,993        1,628          (1,566)         62         19            222                       (3,007)                                    53,289        0.4
 Non-discretionary service                  666           5              (6)             (1)        (25)          16                        (30)                                       626           (0.6)
 IW&I                                       42,973        692            (1,117)         (425)      -             (253)                     (1,036)                                    41,259        (4.0)
 Single-strategy funds                      6,762         314            (579)           (265)      -             -                         (57)                                       6,440         (15.7)
 Execution only                             2,770         85             (240)           (155)      6             15                        (198)                                      2,438         (22.4)
 Total Group                                109,164       2,724          (3,508)         (784)      -             -                         (4,328)                                    104,052       (2.9)

 

 

(iiI) Breakdown of WEALTH Management FUMA and flows by channel

 Quarter ended 31 March & 4 April 2025       Opening FUMA                                   Net Flows  Transfers(3)  IW&I Migrated Assets      Market & Investment Performance (£m)       Closing FUMA  Ann Net Growth(4)

(£m)

(£m)
(£m)

(£m)
(%)
                                                                                                                     (£m)

                                                           Gross Inflows   Gross Outflows

                                                           (£m)            (£m)
 Total direct                                35,933        936             (966)            (30)       24            221                       (2,158)                                    33,990        (0.3)
 Total financial adviser linked              16,967        534             (391)            143        (5)           1                         (932)                                      16,174        3.4
 Total discretionary service                 52,900        1,470           (1,357)          113        19            222                       (3,090)                                    50,164        0.9
 Execution only                              2,770         85              (240)            (155)      6             15                        (198)                                      2,438         (22.4)
 Non-discretionary service                   666           5               (6)              (1)        (25)          16                        (30)                                       626           (0.6)
 Total wealth management                     56,336        1,560           (1,603)          (43)       -             253                       (3,318)                                    53,228        (0.3)
 IW&I                                        42,973        692             (1,117)          (425)      -             (253)                     (1,036)                                    41,259        (4.0)
 Total wealth management for enlarged Group  99,309        2,252           (2,720)          (468)      -             -                         (4,354)                                    94,487        (1.9)

 

 

(iV) Total Group FUMA

 

 Quarter ended 31 March & 4 April 2025      Opening FUMA  Gross Inflows  Gross Outflows  Net Flows  Transfers(3)    IW&I Migrated Assets      Market & Investment Performance (£m)       Closing FUMA  Ann Net Growth(4)

(£m)

(£m)
(£m)

(£m)
(%)
                                                          (£m)           (£m)                                       (£m)
 Rathbones Investment Management            56,336        1,560          (1,603)         (43)       -               253                       (3,318)                                    53,228        (0.3)
 Rathbones Asset Management                 15,751        826            (1,050)         (224)      -               -                         (137)                                      15,390        (5.7)
 IW&I                                       42,973        692            (1,117)         (425)      -               (253)                     (1,036)                                    41,259        (4.0)
 Total                                      115,060       3,078          (3,770)         (692)      -               -                         (4,491)                                    109,877       (2.4)
 Group eliminations(6)                      (5,896)       (354)          262             (92)       -               -                         163                                        (5,825)       6.2
 Total                                      109,164       2,724          (3,508)         (784)      -               -                         (4,328)                                    104,052       (2.9)

3. Transfers represent client FUMA which has transferred from one service to
another and other intra-group movements. These are excluded from net inflows.

4. Annualised net growth calculated as net flows/opening FUMA.

5. Net inflows into multi-asset funds include direct flows and flows into
managed solutions delivered using in-house funds.

6. Group eliminations represent RAM funds that are held within portfolios
managed by RIM (£5.6 billion) and IW&I (£0.3 billion) teams.
Consequently, after excluding the RAM funds, the FUMA of each entity is £47.6
billion in RIM and £41.0 billion within IW&I.

 

8 May 2025

For further information contact:

Investors
Paul Stockton, Group Chief Executive Officer

Iain Hooley, Group Chief Financial Officer

Shelly Patel, Head of Investor Relations

Tel: 020 7399 0071

Email: shelly.patel@rathbones.com (mailto:shelly.patel@rathbones.com)

Press
Tessa Curtis, Director of Corporate Communications & Affairs

Tel: 07833 346238

Email: tessa.curtis@rathbones.com

Camarco
Ed Gascoigne-Pees

Tel: 020 3757 4984

Email: ed.gascoigne-pees@camarco.co.uk
(mailto:ed.gascoigne-pees@camarco.co.uk)

 

Rathbones Group Plc

Rathbones is a leading provider of individual Wealth Management, Asset
Management and related services to Private Clients, Charities, Trustees and
Professional Partners. We have been trusted for generations to manage and
preserve our clients' wealth. Our tradition of thinking, acting and investing
for everyone's tomorrow has been with us from the beginning and continues to
lead us forward.

 

Rathbones headquarters is 30 Gresham Street, London, EC2V 7QN.

 

www.rathbones.com (http://www.rathbones.com)

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