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Schroders hikes dividend 50% as wealth stars in record first half

Schroders hikes dividend 50% as wealth stars in record first half

Schroders wealth revenues almost doubled in a record-breaking first half for the group.

The performance in the six months to June prompted the fund group to increase its dividend by 50% to 24p.

In the six months to 30 June, net revenues in the wealth business increased by 88.5% to £100.5 million, while profit more than doubled, rising from £10.6 million to £26.3 million.

This rise was largely down to the acquisition of Cazenove Capital. ‘The integration of the wealth management business of Cazenove Capital is progressing well and the response from clients has been encouraging,’ the firm told the market.

Net inflows into the wealth business stood at £0.3 billion and assets under management at £30.7 billion versus £16.9 billion in the corresponding period of the previous year.

The performance of this unit helped overall funds under management at Schroders hit a record £271.5 billion, a rise of £35.8 million year-on-year.

Revenues across the group were up 13% to £728.6 million and pre-tax profit 15% higher at £261.5 million. This factors in the adverse impact of the pound’s strength, which wiped £18 million off profit.

Within asset management, revenue rose by 6% from £585.7 million to £621 million, with profit 11% higher at £235.1 million.

Its intermediary business was the driving force behind this performance on the back of inflows of £3.8 billion. This money went primarily into multi-asset and equity funds..

Inflows into its institutional business were far smaller at £0.7 billion, with small outflows from commodities funds mainly in the second quarter reflecting the challenging times for the asset class.

Commenting on the numbers, chief executive Michael Dobson (pictured) said: ‘Schroders achieved record results in the first half of 2014.  We have seen good inflows in July and we have a significant pipeline of business we have won in Institutional which has not yet been funded.

‘Our focus on delivering long-term value for shareholders is reflected in the 50 per cent. increase in the interim dividend.’

Bank of America Merrill Lynch (BofML) repeated its buy stance on the stock following the results, with 2,800p price target.

The dividend came in ahead of BofML analyst Philip Middleton's estimates of 18p and he pointed out the company had suggested an element of rebasing, as well being in line with the company's objective of a 'higher payout ratio'.

He said the payout was indicative of a growing trend among asset managers. 'Increased capital return is a growing theme in the asset management industry, we think.' Middleton said.   

At 9am shares in Schroders had lost 19p, or 0.76%, to stand at 2480p.  

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