Quilter's shares have surged over 10% after the firm reported a profits uptick in the first half of 2023, despite weaker inflows, thanks to a boost from earning greater interest on cash.
In its half-year results released 8 August, the FTSE 100 wealth manager said assets under management and administration were £101.7bn at the end of June, up 2% from December 2022, with positive market movements of £1.9bn and net inflows of £0.2bn, reports Investment Week.
The average AUMA for the period was £101.8bn, however, this was a decrease of 3% from £105.3bn in the same period last year. The lower average assets led to a net management fee revenue fall of 2% to £242m.
Despite this, adjusted profit before tax increased by 25% to £76m as the drop in fee revenues were offset by cost management, as well as higher investment revenue resulting from interest income earned on cash and capital resources.
AUM for Quilter's core offering, which excludes businesses that have been sold and funds due to be closed, rose over 3% to £98.3bn on 30 June.
The firm's core business saw weaker inflows during the period, reporting a 56% slump from the first half of 2022 to £700m. Gross flows of £5.5bn declined by 5% on the same period last year, while outflows of £4.8bn were 14% higher.
The group said the uptick in outflows reflected increased withdrawals from clients that are already in drawdown to offset the impact of higher living costs, and for some clients who chose to repay debt obligations given the higher interest rate environment.
In its affluent segment core business, the Quilter channel attracted net flows of £900m, with gross inflows of £1.8bn up 6% on the comparative period and outflows increasing to £900m from £800m last year.
Fund flows via third-party platforms took a hit over the period, with net outflows amounting to £200m due to and a slowdown in the Compass fund range run-off.
Meanwhile, the high net worth segment saw gross inflows of £1.2bn, which is 8% less than the £1.3bn seen in the first half of 2022, while net inflows of £100m were lower than the £500m reported in H1 2022.
CEO Steven Levin said: "We have delivered a strong improvement in first half profitability, pleasing flow outcomes in the Quilter channel and improved our market share of new advised platform flows.
"Our business model is fully aligned with the principles of the Consumer Duty regime and my focus is on doing more for our customers to improve business momentum in the near-term, and deliver faster growth and higher returns to shareholders in the longer-term.
"We are targeting an additional £50m of simplification savings by 2025 and we expect consensus profit estimates for this year to increase materially."
Shares in the group have jumped over 13% to 80.6p this morning, following the update, according to data from MarketWatch.
This article was first published by Investment Week.
