Schroders, the asset management firm, has bounced back from a challenging first quarter marred by tariff issues, thanks to strategic investment in line with its three-year transformation plan.
Assets under management (AUM) remained steady at £776.6bn, a slight decrease from £778.7bn recorded the previous year, as improved performance and an investment of £24bn was counterbalanced by foreign exchange movements due to the weakening dollar, as reported by .
Excluding JVs and associates, average AUM increased by 3 per cent to £662.2bn, while performance fees and net carried interest rose to £20.7m, resulting in a net operating revenue increase to £1.2bn.
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Gross inflows saw an 8 per cent rise to £68.2bn, while adjusted operating profit climbed by 7 per cent from £294.1m to £316m.
However, statutory profit before tax took a hit, falling from £276.3m to £196.9m due to the impact of portfolio restructuring charges and transformation charges.
Transformation Plan
As part of its portfolio adjustment plans, the firm exited its real estate business in Munich and private credit business in Australia, while it restructured its businesses in South Korea and China. The company also wrote off its investment in a US credit originator.
These changes are part of the firm's three-year plan to save £150m and return to profitable growth.
The company recognised its significant progress in its transformation programme, with operating expenses decreasing by £21m, while it continued to reinvest, putting £8m into selective hiring across the firm and developing its active ETF programme.
Strong performance across the arms
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The asset management arm of the firm reported a net operating income of £940.2m, an increase from £934.9m the previous year, driven by a strong performance in global equities from its public market business.
The wealth management division brought in £1.6bn of net new business, aligning with the firm's annual target of 5-7 per cent, with Benchmark, a recent acquisition, contributing a third of the division's net flows, while further acquisitions were completed.
Assets under management (AUM) in wealth management rose to £145bn, and net operating revenue saw a 9 per cent increase to £258.3m from £235.9m, due to improved efficiencies and reduced third-party costs, driven by acquisitions.
Following the strong early progress of its transformation plan, the company updated its full-year expectation to deliver an in-year cost reduction of £50m.
The Board has decided not to change its interim dividend, which will remain at 6.5p per share.