Rathbone thrives despite Q2 setbacks

Investment management outfit Rathbone Brothers enjoyed a strong first half as equity markets rebounded, with growth in assets under management and higher commission levels. Profit before tax in the first half of 2010 rose 11.3% to £15.8m from £14.2m in the first half of last year. Underlying profit before tax, which excludes amortisation of client relationship intangible assets and Financial Services Compensation Scheme charges, increased 16.8% from £15.5m last year to £18.1m.Total funds under management were £13.29bn at 30 June 2010, up 1.5% from £13.10bn at 31 December 2009. This compares to a decrease of 9.2% in the FTSE 100 Index and a decrease of 3.2% in the FTSE/APCIMS Balanced Index over the same period.Acquired inflows of funds under management into Rathbone Investment Management totalled £356m in the first six months of 2010, which when added to net organic growth represents a net annual growth rate of 9.9%, topping 2009's growth rate of 7.8%. Net organic growth of £243m for the first half represents an annualised growth rate of 4.0% (2009: 5.8%) as more clients use cash from portfolios to supplement their income.Funds under management at Rathbone Unit Trust Management had fallen to £877m at the end of June from £935m at the end of 2009, with net redemptions in the first half of the year of £41m, against net redemptions of £180m in the corresponding period of 2009.The company had been considering relinquishing its banking licence in view of the changing regulatory environment but on balance the board considers it more useful to clients and shareholders to retain it. "Whilst a bank is exposed to the risk of being obliged to make further payments to the Financial Services Compensation Scheme in respect of failures in the banking sector, your board considers that the opportunity to provide certain banking services to clients, the prospect of higher interest rate returns in more "normal" market conditions and the differentiation associated with being a bank outweigh the regulatory uncertainties and risks," the company said.The company is paying an unchanged interim dividend of 16.0p. Rathbone