Brown Shipley saw pre-tax profit triple to £7 million over the course of 2013.
The private bank’s assets under management increased by 12% to £3.1 billion, with 86% of this figure run on a discretionary basis. The group noted a 6% rise in investment management income, contributing to a 7% rise in net operating income to £41.1 million, overcoming a move out of trail-paying units.
In spite of this, Brown Shipley said it is becoming ‘increasingly difficult’ to grow funds under management (FUM).
‘Outflows of FUM from clients are becoming larger as capital withdrawals become more commonplace to compensate for lack of income on investments,’ the company said in its results.
But chief executive Ian Sackfield (pictured) told Wealth Manager Brown Shipley is not the only one in the industry to suffer from these kinds of redemptions.
‘It’s a concern everywhere. Interest rates are at 0.5%. The income is not there so people need more capital,’ he added.
During 2013, Brown Shipley’s Financial Services Compensation Scheme (FSCS) levy more than halved to £151,000; £220,000 less than 2012’s bill.
The results noted ‘the company was involved in a number of acquisition opportunities, although none were pursued to conclusion’ during last year.
Sackfield said the business is targeting discretionary and financial planning firms, but is not in talks with anyone at the moment. Instead, they will look to augment growth through quality private banking hires.
‘The focus is to grow and recruit the right private bankers from the right organisations, but culturally they also have to be right.’
Sackfield also acknowledged that senior hires will initially be loss-making.
‘If you recruit private bankers in the first 12-18 months you will lose money on these individuals, but it’s about long-term investment in the business.’
On the remuneration front, the bank paid out £734,000 to its highest paid director over the year, up £88,000 compared to 2012. This contributed to a total wage bill among senior management of £2.6 million, up £500,000 on the year.
Brown Shipley also grew its loan book by £26 million during the year to £118 million, which helped contribute to a 19% increase in interest income.