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WH Ireland issues earnings alert as wealth costs mount

WH Ireland issues earnings alert as wealth costs mount

WH Ireland has warned losses are likely to increase as it continues to invest in its wealth business. 

The news was revealed in a trading statement covering the 16 months to 31 March. 

The private client stockbroker also said reduced transactions in its corporate and institutional broking division was putting pressure on the business. 

'The combination of reduced transactions from the corporate and institutional broking division and the continuation of higher costs in the Private Wealth Management division will result in an increased loss for the 16 month period from that reported at the second interim 12-month period ended 30 November 2017,' the firm, led by Richard Killingbeck (pictured) told the market. 

WH Ireland said its Private Wealth Management division has continued its transition to an advice-led, fee-driven model, with its fee paying service propositions (discretionary and managed advisory) accounting for over 70% of total assets. This helped boost fee income by over 20% relative to the previous 12 months. 

Over the same time, the firm's wealth planning team witnessed a 50% growth in fees. 

However, as the group had anticipated, execution only assets declined significantly after the introduction of platform fees for the first time on its service proposition.

'Encouragingly recurring fee revenue now accounts for more than 60% of total revenue in this division; the division's focus on margin improvement will continue during the current financial year,' WH Ireland said. 

'Investment costs in regard to the operational platform changes have remained higher than expected during the final four month period, primarily as the resolution of legacy issues has taken longer than anticipated to complete.  We believe that the full benefits of identified cost savings in this division will be a significant contributor to profitability in the current financial year.' 

Meanwhile, the firm's corporate and institutional broking arm reflected the wider problems reported in the sector after a positive 2017, with 'much reduced' levels of transaction based fee income in the final few months of the reporting period.

'A number of these transactions were deferred and whilst the pipeline of potential new business remains solid delivery will, as always, be dependent upon prevailing market conditions,' WH Ireland highlighted. 

On a brighter note, it added the division has been appointed as broker or Nomad to four new quoted companies since the beginning of 2018. 

WH Ireland hopes to weather the current storm and deliver decent profitability over the longer term. 

'Looking forward to the year ending 31 March 2019, the board anticipates that the combination of lower costs in the Private Wealth Management division together with more normalised levels of transaction revenue from the corporate and institutional broking division will lead to strong progress in the group's profitability during the current financial year.'

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