Rathbones beats profit expectations as merger progresses
Rathbones’ operating income increased to £895.9m in 2024, beating analyst expectations as the firm progressed with its merger of Investec Wealth and Investment (IW&I).
The wealth manager revealed profit before tax almost doubled last year, from £57.6m to £99.6m in its full-year results.
The firm’s underlying profit before tax increased from £127.1m to £227.6m, above the £224.7m expected by analysts.
Funds under management hit £109.2bn, up from £105.3bn at the start of the year but below the £110.1bn expected by analysts.
Last year was the first full financial year since Rathbones merged with Investec Wealth and Investment (IW&I), when the groups combined in an £839m tie-up.
“The Investec transaction gives the enlarged group scale, as well as a range of other strategic benefits to accompany the £60m of expected synergies,” said Peel Hunt analyst Stuart Duncan.
Duncan also noted that Rathbones’ stock price was trading around 10 times the expected earnings for the group next year, below comparable stocks in the sector.
“With a yield of over five per cent, we believe the shares provide lots of attraction in a sector that continues to offer long-term structural growth,” added the Peel Hunt analyst.
In its guidance, Rathbones said it was making “good progress” towards delivering an underlying operating margin of 30 per cent from September 2026, three years after the IW&I purchase.
“2024 has been a very exciting year for the group as we began in earnest to bring Rathbones and IW&I together as one combined business committed to helping our clients achieve their longer-term financial goals,” said Rathbones chief Paul Stockton.
“In an eventful year, we attracted record gross inflows by leveraging our enlarged platform, grew underlying operating margin, exceeded the 2024 synergy targets we set out for the IW&I combination, and increased our dividend by 6.9 per cent.”