CHARLES Stanley yesterday warned over the impact of the long-running Eurozone crisis as it posted a slump in profits of more than a third.
The broker and investment manager has been hit by “re-doubled” uncertainty in the single currency area in the second half of the year, with clients sitting on their cash until the future of Greece and other debt-stricken nations becomes clear.
“Continuing uncertainty is the big issue. Some kind of resolution, even if it is bad, will help people in terms of making decisions for the future,” finance director James Rawlingson told City A.M.
“The Eurozone is a victory of political will over economic sense. It always has been and continues to be, which makes it hard to predict.”
The firm’s reported profit before tax dived 37 per cent to £8.5m for the year to 31 March but the total dividend was raised five per cent to 11.25p.
Revenue fell five per cent to £119.6m and chairman Sir David Howard lashed out after Charles Stanley took another big hit from the Financial Services Compensation Scheme levy. The firm was charged £1.6m, on top of £2.6m for 2010-11.
Howard said “intense regulatory pressure” on the sector placed a heavy burden on resources.
“But there is little evidence that the increasingly intrusive and burdensome micro-management of investment companies has been successful in staving off some egregious examples of fraud and mismanagement, the cost of which is spread across the shareholders in financial service companies,” he added.
Charles Stanley’s funds under management and administration rose six per cent to £15.4bn after a “good” increase in business from existing customers. Fee income rose eight per cent to £67.4m.