British multinational wealth management company Quilter’s core net inflows increased 164% to £1.7 billion (R39.6bn) for the six months to June 30, reflecting a good performance from its Quilter channel in both high net worth and affluent segments, and much improved independent financial adviser (IFA) channel flows onto the Quilter Platform.
Assets under management and administration (AuMA) of £113.8bn increased by 7% on December 31, 2023, driven by net inflows of £1.5bn and positive market movements of £5.6bn.
The 1.7 pence per share interim dividend was equal to one third of last year’s total dividend, and was also 13.3% higher than the first-half dividend of last year. Adjusted diluted earnings a share increased 21% to 5.2 pence.
While second-half profit was unlikely to match the first half, further cost discipline meant the cost out-turn for the year was likely to be modestly lower than guided at the annual results in March, said CEO Steven Levin.
“We expect lower second-half investment income reflecting a gradual decline in interest rates and planned capital investment to grow our business. When combined with normal revenue margin attrition, this is likely to largely offset the income benefit from net flows, leading to broadly stable second-half revenues. We are also planning for higher second-half costs to fund investment in growth initiatives and our brand,” said Levin.
In the first half, core gross inflows of £7.4bn increased by 35%, with the second quarter contribution higher than the first. Second-quarter Platform flows were ahead of the first, with much increased IFA channel flows contributing to stronger net flows, said Levin.
Adjusted pre-tax profit increased by 28% to £97m, delivering an operating margin of 29%, an increase of five percentage points.
Total net revenue increased by 5% to £329m with an increase in revenue generated on corporate cash balances partially offset by planned revenue margin attrition. Costs declined for the third consecutive first-half period.
“With UK inflation easing, consumers’ disposable income has improved. We expect new business-levels across the industry in 2024 to be higher than in 2023.” First half adjusted profit increased 28% to £97m,” he said.
While expected lower interest rates in the second half would reduce investment income, lower rates would support market-levels and increase client focus on long-term saving, both of which were supportive for new business flows and revenue growth, Levin said.
Affluent segment revenues increased 6% to £206m reflecting higher average AuMA and net inflows, partially offset by lower revenue margins from repricing of the Platform and Cirilium investment range last year. Cost management and a lower-than-expected FSCS levy led to a 33% increase in adjusted profit to £72m.
High net worth segment revenues increased 4% to £112m, reflecting higher average AuMA on a slightly lower margin. Operating expenses modestly increased to £87m from £85m. The segment contribution to adjusted profit before tax was 9% higher at £25m.
In the Affluent, the multi-asset strategy funds were well diversified and tended to lag in markets where performance was driven by a narrow breadth from relatively few stocks. As a result, Quilter Investors’ investment performance over the past six months had lagged due to the strong performance of the “Magnificent 7” stocks in the US equity market, where the funds remain underweight.
High net worth investment performance had been strong, outperforming the ARC PCI steady growth and equity risk benchmark indices to end-March. Core Discretionary and Managed Portfolio Solutions had outperformed their benchmarks over the 12 months.
“The first half of 2024 has been a period of strong progress and reflects my focus on delivering strong business performance while fundamentally changing the way we work,” said Levin.
BUSINESS REPORT