Schroder banking revenue falls 17% as lower margins hit group

Schroder Private Banking revenue fell 17% over the course of last year from £114 million to £94.4 million as margins were knocked by outflows and lower levels of client trading.

The results for the division were reflected at the top level with the shift to lower-margin institutional share classes and an increased level of internal investment cutting profit 12% from £407 million to £360 million.

The group profit decline came despite a four quarters of positive inflows bringing assets under management to a record high of £212 billion, versus £187 billion a year ago.

The private banking division was also affected by a £7 million loan write-down and depressed activity in the property markets.    

‘Our Private Banking business faced a number of challenges in 2012,’ the company said in a statement.

‘We continued to generate inflows in the UK private client and charities business but we saw outflows from our cash management service, and in our Swiss business reflecting changes in our client base.

‘In the short term we may see further net outflows, but longer term we remain positive about opportunities in Private Banking. We are streamlining the management structure, adding to our talent pool and strengthening our business development activities.’

At the opening bell shares in the business were up 0.44% at £20.45.