Rathbones profit skyrockets 120 per cent as Investec merger pays off

Rathbones Group’s underlying profit before tax skyrocketed 120 per cent in the first half of the year, as the group ran well ahead of targets following its merger with Investec Wealth & Investment.

Profit at the group jumped to £112.1m in line with expectations thanks in part to “synergy realisation” between the two companies, CEO Paul Stockton said in its interim results today.

“We have achieved synergy realisation ahead of target, with run-rate synergies of £20m delivered to the end of June 2024, well ahead of our year one post-combination objective of £15m,” Stockton explained.

However, the substantial jump in profit was also due to the completed merger boosting up numbers. Legacy Rathbones operating income did grow by 11.6 per cent, thanks to recurring fees on a higher amount of assets.

Rathbones‘ funds under management and administration jumped 3.4 per cent to £108.9bn over the six months, thanks to the strong performance of its investments.

Another win for the group was the declining outflows from customers, as investors pulled only £30m from the group in the second quarter of the year, compared to £200m in the first.

“With flows much improved and integration progressing well, we see good upside in the shares, which offer exposure to the structural growth in wealth management,” said Peel Hunt analysts Stuart Duncan and Robert Sage.

Outflows for the group came mainly from its wealth management and intra-group holdings arms, with wealth management losing £482m throughout the six months.

However, its asset management arm gained £531m in new money during the first half of the year, pushing its assets under management past £15bn.

The other progressing merger for the group was Saunderson House, with the migration of assets over to the main group “substantially completed,” added Stockton, as only £200m was yet to be moved over.

“We end the period in a strong position, with confidence in the prospects for our enlarged business and a clear focus on maintaining the momentum of delivery during the second half of the year,” he concluded.