Brewin Dolphin’s fourth quarter results showed that while annual fee income was up 14 per cent to £47.4m from £41.5m in December 2013, commission income declined by 23 per cent to £17m, due to lower transaction volumes.
The firm’s latest interim management statement found that by the first quarter of 2015, core income was £64.4m, up just one per cent year-on-year up from £63.8m, while total income also grew by one per cent to £70.2m, from £69.6m on 29 December 2013.
Total funds under management increased by five per cent year-on-year to £37.9bn and were up by three per cent from the third quarter.
Discretionary funds under management grew at the fastest pace, reaching £24.8bn at the end of the year, up 12 per cent from £22.2bn at the end of 2013.
The group reported that 84 per cent of total managed/advised funds now receive a discretionary service, working towards a target of 90 per cent, while there was £600,000 worth of net internal transfers from advisory services to execution-only during the quarter.
Execution only funds grew by £900,000 to £8.3bn, primarily as the result of transfers of advisory dealing and advisory managed clients.
David Nicol, chief executive, stated that despite tough market conditions in the first quarter, the group has made progress in growing overall funds under management, particularly in discretionary services.
“Strong growth in fee income was driven by organic fund inflows and positive investment performance. However total income growth in the quarter was impacted by a material decline in commission income as a result of lower transaction volumes due to volatile market conditions.”
Mr Nicol predicted that continued market volatility from global economic concerns coupled with political uncertainty in the UK and Europe is likely to persist in the short term.
“This may lead to a continuation of the trend for lower transaction volumes and associated commission income.”
Brewin Dolphin’s discretionary managed fund annualised net organic growth rate of five per cent was in line with long-term targets and is “continuing to benefit from the relationships developed with financial intermediaries”, according to the statement.
Fee income continues to grow in line with higher funds under management, particularly in the core discretionary service. The significant fall in commission income in the quarter was primarily a result of lower transaction volumes due to market volatility in the period, the report read.
Other income remained flat at £5.8m - down slightly from £5.9m at 29 December 2013 - with growth in financial planning income offset by reduced net interest income.
At the start of December the firm reported that profits had been hit by costs incurred in abandoning a proposed new IT operating system, falling by 70 per cent over 2014, from £28.4m in 2013 to £8.6m in the 12 months to the end of September.
peter.walker@ft.com
