TOP NEWS: Schroders Assets Rise Above GBP500 Billion Mark In 2019

(Alliance News) - Schroders PLC on Thursday held its annual dividend steady as profit dropped ...

Alliance News 5 March, 2020 | 8:48AM
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(Alliance News) - Schroders PLC on Thursday held its annual dividend steady as profit dropped amid challenging market conditions, but the value of managed assets beat consensus expectations.

For 2019, the asset and wealth management group reported a 4% drop in pretax profit to GBP624.6 million from GBP649.9 million the year before, on revenue that declined by 2.4% to GBP2.54 billion from GBP2.63 billion.

Pretax profit before exceptional items was down 8% at GBP701.2 million from GBP761.2 million in 2018, but remained above consensus expectations of a 10% drop to GBP684.5 million.

Net income remained broadly flat at GBP2.12 billion for the year.

Schroders's assets under management at the end of December stood at GBP500.2 billion, a 23% jump from GBP363.5 billion at the end of 2018. The figure also reflected a 0.6% beat of company-compiled market consensus expectations of GBP497.3 billion.

The financial firm reported GBP43.4 billion in net inflows, swinging from GBP11.2 billion in outflows in 2018, which Schroders attributed to the first tranches of Scottish Widows mandates.

In 2018, Lloyds Banking Group PLC hired Schroders to manage a portion of its Scottish Widows assets - which stood at GBP104 billion at June 30, 2019 - following its decision to terminate the contract with Standard Life Aberdeen PLC.

SLA fought the decision, however, which saw the deal get tied up. In the end, SLA and Lloyds agreed, following a tribunal hearing, that SLA will manage about a third of Scottish Widows' total assets under management, which comes to about GBP35 billion, until at least April 2022 - when the original investment management contract ends.

As part of the Scottish Widows deal with Schroders, Lloyds agreed to a new joint venture: Schroders Personal Wealth.

The group net inflows of GBP43.4 billion missed consensus expectations of GBP43.9 billion. Excluding the Scottish Widows deal, Schroders reported net outflows of GBP1.2 billion, slightly worse than consensus expectations of GBP1.1 billion in outflows.

The group declared a final dividend of 79.0 pence per share, bringing the total payout to 114.0p, in-line with the prior year.

Looking ahead, Schroders said that despite recent market weakness, the group remains well placed to generate growth over the long term. In the short-term, however, the coronavirus has created considerable uncertainty in economies and markets.

Schroders said it has enough resilience to deal with it, but the hit in markets will be dependent on how effective containment measures are.

"We are pleased that the structural changes we have made in our business have delivered a resilient performance with record net new business of GBP43.4 billion during the year. As a committed active asset manager, our assets under management exceeded half a trillion pounds for the first time," said Chief Executive Peter Harrison.

"The year saw three notable events: the successful launch of Schroders Personal Wealth, the start of the transfer of the Scottish Widows mandate to Schroders and the establishment of a market-leading position in impact investing and micro-finance through our acquisition of BlueOrchard," Harrison added.

Shares in Schroders were up 0.4% at 2,896.00 pence on Thursday in London.

By Dayo Laniyan; dayolaniyan@alliancenews.com

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Schroders PLC 2,484.00 GBX -1.43 -

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