Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

FSCS bill swallows 40% of Charles Stanley's pre-tax profit

FSCS bill swallows 40% of Charles Stanley's pre-tax profit

Despite stock market turbulence, Charles Stanley grew its discretionary assets by 22% to £5.4 billion in the first half, but reported a 34% decrease in profit in its interim results.

Charles Stanley's Financial Services Compensation Scheme (FSCS) bill caused some of this drag, with the stockbroker claiming that the levy amounts to 'no more than a tax' which it cannot plan for.

'Once again our results have been seriously impacted by large demands from the FSCS, which have paid for the failings of businesses in quite different areas of activity.

'This is really no more than a sort of tax which is levied on us in a way, and in amounts, that we can't plan for. The demand in the latest half-year of £1.4 million (first half 2011/12: £0.6 million) has absorbed about 40% of our pre-tax profit,' the firm said.

Over the six months to the end of September, the group saw total funds under management and administration rise by 1.3%, from £15.4 billion to £15.6 billion at the end of March. However, this marked a 13.9% increase from its £13.7 billion assets at the same time last year.

Revenue for the half year came in at £59.7 million, 0.8% down from £60.2 million previously. Recorded profit before tax fell by 34.6% from £3.4 million to £5.2 million in the first half.

In addition to the FSCS levy, Charles Stanley blamed the profit fall on one-off costs related to the launch of its direct to consumer platform, along with falling transaction volumes and a drop in commission income.

Charles Stanley chairman Sir David Howard (pictured) said: ‘Most pleasing is the 22.7% rise in funds held under discretionary management between September 2011 and 2012 which now stand at £5.4 billion. Over the same period since 30 September 2011 the FTSE 100 index increased by 12.0% and the Apcims Balanced index by 10.2%.’

‘Despite a continuing decline in transaction volumes and a 15.8% decrease in overall commission income, group revenues remained steady at £59.7 million during the half year to 30 September 2012.

‘This represents a flat performance on the same period last year. We have continued to grow our fee based income in both absolute terms and as a proportion of overall group revenues. This strategy of reducing reliance on market volumes has produced an 11.2% increase in our fee income to £36.8 million over the half year.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Volatility spike: How ETFs can soften the blow

Volatility spike: How ETFs can soften the blow

ETFGI’s Deborah Fuhr discusses the role of ETFs in client portfolios during volatile market conditions

Play Winter market warmers, the post QE world and timing the Fed

Winter market warmers, the post QE world and timing the Fed

This week’s episode of Investment Pulse looks at the winding down of quantitative easing, whether to try and time a US Federal Reserve rate rise and if strong seasonal performers can reverse recent market slumps

Play JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Wealth Manager on Twitter