Annual profits surge at Rathbones Group

(Sharecast News) - Rathbones Group posted a surge in annual profits on Wednesday, the first full year since the wealth manager's merger with Investec Wealth and Investments. The wealth manager, which joined forces with IW&I in September 2023, said net outflows in 2024 were £1.4bn, reflecting in part the economic backdrop, including higher interest rates and the elevated cost of living.

However, total group funds under management and administration increased 3.7% to £109.2bn, boosted by positive market movements, while operating income jumped to £895.9m from £571.1m.

Underlying pre-tax profit soared 79.1% to £227.6m.

Looking ahead, Rathbones said headcount was expected to reduce over the course of 2025, as it looked to cut costs and continue with the merger integration.

It is targeting an underlying operating margin of 30% from September 2026, and said it was making "good progress" towards achieving it.

Paul Stockton, chief executive, said: "2024 has been a very exciting year for the group as we begin in earnest to bring Rathbones and IW&I together.

"In an eventual 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 combination and increased our dividend by 6.9%

"Our priorities for 2025 including completing the migration of IW&I clients and fully integrating our businesses onto one platform."

Vivek Raja, analyst at Shore Capital - which has a 'buy' rating on the stock - said: "Rathbone's valuation remains depressed, in our view, both for the quality of earnings and relative to historical sector multiples. However, re-rating is likely to be contingent on a sustained recovery in net flows and successful migration of IW&I."

As at 0930 GMT, Rathbones was trading 2% higher at 1,725.05p.