Rathbone Brothers posted a 30% jump in annual pre-tax profit in the tough conditions and said it has not been subject to any regulatory action regarding the 'suitability' of its portfolios.
Profits at the private client stockbroker rose from £30.1 million in 2010 to £39.2 million in 2011. The figure included around £3 million in costs incurred for the planned relocation of the firm’s London headquarters to 1 Curzon Street, scheduled to take place later this weekend.
Funds under management at Rathbones edged up from £15.63 billion to £15.85 billion, a reasonable performance given the FTSE 100 and FTSE Apcims Balanced index fell by 6% and 3% respectively over the year.
The firm’s private client division, Rathbone Investment Management, saw funds under management rise from £14.59 billion to £14.76 billion with organic net inflows rising from £1.46 billion to £1.66 billion.
The division earned £80.1 million in net fee income, a considerable rise on 2010’s £66.5 million, while commission accounted £36.2 million of income versus £35.7 million in 2010 as the firm positions itself for the new regulatory environment.
The firm’s chief executive Andy Pomfret (pictured) said Rathbones was not embroiled in the FSA’s suitability probe after the regulator claimed four out five portfolios were unsuitable for clients.
'During the year there has been a great deal of attention placed by the FSA on the industry's approach to ensuring that investment portfolios are suitable for clients,' Pomfret said.
‘Although the FSA's 2011 thematic review reported serious concerns around whether portfolios were suitable for clients among many of our peer group, we are not - and have not been - subject to any regulatory action in this regard. We continue to believe that our approach to managing suitability is appropriate.’
Meanwhile the firm’s funds business, Rathbone Unit Trust Management, saw positive net monthly sales into its fund range throughout 2011, helping assets under management rise from £1.04 billion to £1.09 billion. Net inflows in 2011 stood at £97 million versus an outflow of £30 million in 2010.
The performance across the board prompted the group to recommend a final dividend of 29p per share, making a total dividend per share of 46p for the year; up 4.5% from the 44p in 2010.
Pomfret is confident the group can continue to deliver the goods with testing times ahead. ‘Rathbones is cautiously optimistic about the prospects for 2012 with the UK equity market ending 2011 on a more positive note.
'There is no doubt that the uncertainties over Europe persist but these are balanced by indications that the world economy continues to grow and some developed economies are showing small signs of improvement, particularly the USA.'
He also indicated his firm could make more acquisitions. ‘We are seeing signs of underlying cost inflation but we will continue to invest in and grow our business. We continue to be well positioned to take advantage of opportunities to welcome more investment managers and clients to Rathbones.’