Rathbones Group plc reported mixed first-quarter results, recording total net client outflows of £0.8bn, with the majority of that reduction - £0.5bn - coming from its Wealth Management division.
Within Wealth Management, management said flows were broadly unchanged once execution-only business was excluded and after accounting for a £0.2bn tax-related outflow tied to the 2024 budget. Over the quarter the Wealth Management operation experienced gross outflows of £3.2bn.
Asset Management also recorded negative net flows. Excluding an intra-group adjustment, net flows in Asset Management were -£0.4bn, or -£0.3bn when that adjustment was included.
Total funds under management and administration stood at £113.6bn at the end of the quarter, which the company noted was around 2% below Visible Alpha consensus expectations. Market movements reduced assets by £1,138m during the period.
On the income front, Rathbones reported an operating income increase of 9.4% year-over-year to £241m, a level described as roughly 1% above consensus estimates for the quarter. Separately, net operating income rose by £20.6m year-over-year to £240.7m.
The year-over-year improvement in net operating income was driven primarily by higher fee income, which added £14.8m, and an uplift in net interest income of £7.1m. Other income fell by £5.6m, partially offsetting those gains.
Despite the lower level of funds under management and administration relative to consensus, overall revenue performance outpaced forecasts for the period. Management characterized this as an indication that prior revenue margin assumptions in consensus estimates may have been conservative.
Context and takeaways
- Net outflows were concentrated in Wealth Management but were materially affected by execution-only activity and a one-off tax-related outflow.
- Asset Management also experienced net withdrawals, with intra-group adjustments affecting the headline number.
- Revenue and operating income outperformed consensus, supported by fees and net interest, even as total assets fell short of Visible Alpha expectations.