British wealth manager Brewin Dolphin feels the pinch of inflation as profits dip 5.7% to £38.4m as RBC takeover approaches
- Costs 5.7% higher in 2022 at £160.6m compared to £152m the previous year
- But top line boosted with income rising 4.8% from £199.9m in 2021 to £209.5m
British wealth manager Brewin Dolphin has a reported a 5.7 per cent dip in pre-tax profits due to inflationary pressures.
The London-headquartered firm’s profits fell to £38.4million in the six months to 13 March from £40.7million over the same period in 2021 as heavier costs hit.
Brewin Dolphin shares were down 0.18 per cent at 512.10 pence during afternoon trading.
British wealth manager Brewin Dolphin has a reported a 5.7% dip in pre-tax profits due to inflationary pressures
Its total operating costs before adjusted items were 5.7 per cent higher in 2022 at £160.6million, compared to £152million the previous year.
Meanwhile, fixed costs increased by £8million to £122.3million as staff costs grew 4.4 per cent to £77.6million.
Despite the obstacles faced in the form of inflation and market volatility, Brewin Dolphin told investors its ‘strong inflows’ and ‘resilient advice-focused strategy’ gives it confidence in its full year outlook.
Royal Bank of Canada made an agreed £1.6billion all-cash offer for Brewin Dolphin at the end of March.
This will mean shareholders will be offered 515p per share, representing a 62 per cent premium to its 318p closing price the day before the deal was reported.
The deal values Brewin Dolphin at 2.8 per cent of its £55billion in assets under management as of 28 February.
CEO Robin Beer said the RBC takeover will ‘bring new and exciting opportunities for our clients and people’.
Directors of Brewin Dolphin gave a unanimous backing for the deal, which is expected to complete at the end of the third quarter of this year.
The London-headquartered firm’s (headquarters pictured) profits fell from £40.7m for the six months to March 13 in 2021 compared to £38.4m during the same period this year
The combination would make RBC Wealth Management the third biggest wealth manager in Britain and Ireland, as well as a market leader in Canada with a growing position in the US.
Commenting on the deal, CEO Beer said in the latest interim report: ‘Whilst the transaction is still to complete, we remain focused on delivering our strategic priorities for the year, which will enable us to become a leading advice-focused digitally enabled wealth manager.’
While pre-tax profits were down, Brewin Dolphin’s top-line saw a boost with income rising 4.8 per cent from £199.9million in 2021 to £209.5million.
Last November, the firm revealed it had attracted record discretionary fund inflows of £4billion in the year to 30 September, with income of more than £400million.
Income growth was driven by a significant surge in fees from private clients, expanding demand for financial advisory services 1762 and wealth core, and a £1billion increase in discretionary net flows.
Brewin Dolphin also noted the strong performance by its Irish division, which saw total fund growth of £800million and a 30 per cent jump in income on the back of Brexit-related transfers and a one-off corporate transaction in the third quarter.
British investment firms have benefited heavily from gaining hundreds of thousands of new customers during the pandemic, many of whom were young and trying investing for the first time.