Profits surge at Schroders as assets rise

City A.M. Reporter
UK FUND manager Schroders beat analysts’ forecasts for first-half earnings yesterday, as new asset management products helped it brave weakening markets in the second quarter.

The company reported a sharp rise in pre-tax profit to £188.2m over the period, comfortably beating consensus analyst forecasts for between £150m and £168m.

Falling equity markets had slowed new business in the second quarter, but had remained “strongly positive”.

Schroders cautioned markets are likely to remain volatile in coming months amid continuing economic uncertainty. “I wouldn’t be at all surprised if people were more cautious in the second half,” chief financial officer Kevin Parry said.

Fund flows had held up largely because of the development of new product lines such as bonds and liability driven investment (LDI) strategies used by pension funds to match investments to pay-outs to retirees, Parry said.

Funds under management stood at £164bn as of the end of June, up from £148.4bn a year earlier. The asset management division posted a profit of £177.3m, while the private banking arm, hit by falling interest revenue, saw profits drop to £6.6m from £14.9m a year earlier.

It will pay an interim dividend of 11p per share, up from 10p in 2009.