St James’s Place posts five per cent profit fall as inflows slow
Wealth manager St James’s Place posts a fall in full-year operating profit after the pace of inflows of client cash slowed.
The figures
St James’s Place reported operating profit of £952m, a fall from the £1bn posted in 2018. This was, in part, due to a fall in new business from £852.7m in 2018 to £793m in 2019.
Net inflow of funds under management fell from £10.3bn to £9bn, while client funds increased to a record £117bn, up from £95.6bn the year before.
The firm’s final dividend increased five per cent to 31.22p per share, bringing the full year dividend to 49.71p per share.
Why it’s interesting
The wealth management sector has been rocked by geopolitical uncertainty and St James’s Place has pointed to the US/China trade dispute as a factor in subdued investor sentiment.
After a tough year marked by political uncertainty, chief executive Andrew Croft said he was optimistic about future growth particularly following the decisive general election result.
“This has consequently resulted in an increase in activity across the business with new investments seeing a return to good growth in the early part of 2020,” he said.
Shares are down 3.18 per cent.
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What St James’s Place said
Chief executive Andrew Croft said:
“Last year was challenging for the UK wealth management sector with investor sentiment being impacted by uncertain macro-economic indicators, the US/China trade dispute, and the domestic political environment. Therefore, I am pleased to report a solid set of results. Positive net flows, together with the impact of positive investment returns, increased client funds under management to a record £117.0 billion, once again demonstrating the resilience of St. James’s Place.
The fundamentals underlying the business remain strong and over time, increasing funds under management will generate increased returns. However, in the short term, our profit has been impacted by the more modest gross flows relative to the planned investment in the business for future growth.