Brewin profit drops on levy and cost rises

STOCKBROKER Brewin Dolphin blamed the cost of moving to a new regulatory regime and a compensation levy for a 27 per cent fall in its full-year profit yesterday.

Brewin grew funds under management 3.4 per cent to £24bn in the year to September and raised its income by 10 per cent to £264m, but said it had sacrificed £17.7m of profits due to costs including regulatory intervention, takeovers and redundancies.

More than £6m was paid to the Financial Services Compensation Scheme levy, to compensate investors in collapsed firm Keydata Financial Services, but Brewin’s executive chairman Jamie Matheson warned that was “only part of the ongoing and increasing cost of regulation”.

It also bore £3m of one-off costs to move its contract renewals to a form that accommodated new Retail Distribution Review regulation, though Peel Hunt analyst Stuart Duncan said it was “a significant step in allowing the group to meet the changes expected under RDR”.

Brewin invested £3m in a strategic review with a view to streamlining and cutting costs from the business.

“Our focus on cost control to achieve efficiencies is undiminished,” Matheson said. “It will take three years to achieve maximum benefits for shareholders, by which time we intend to have increased our operating margin to over 20 per cent.”