Schroders protected by institutional arm after £2.7bn retail outflow

Strength in Schroders' institutional business help offset weakness in its retail business to help the group stand firm in the dreadful market conditions.

In the three months to the end of September the Schroders enjoyed net inflows into its institutional arm of £2 8 billion. However, these were wiped out by outflows of £2.7 billion through its intermediary channel and a further outflow of £0.1 billion in its private client business.

Overall asset Management net revenue in the period rose from £232.7 million in the corresponding period of last year to £256.8 million thanks largely to a jump in performance fees from £7.6 million to £14.3 million.

This helped profit before tax rise from £85.9 million to £92.7 million, lifting profit for the first nine months of the year for the unit to £295.8 million and leaving it well on track to beat 2010's profit of £263.2 million.  

Elswhere, private banking net revenue for the three months to 30 September was £29.3 million versus £24 million for the three months, while profit before tax was £6.7 million versus £2.9 million lifting its profit for this year to £19 million versus £9.5 million in 2010.  

Overall the group looks on course for a decent year with profit across all its segments standing at £317.3 million in 2011, well ahead of the £282.7 million it delivered in 2010. It has seen net new business of £5.1 billion with assets under management standing at £182.2 billion.

Commenting on the numbers, the firm led by chief executive Michael Dobson (pictured) said: 'Financial markets are likely to remain volatile with no sustained recovery in equities until we see some resolution to the uncertainties facing the eurozone.

'Until such time, the environment in intermediary and private banking will continue to be difficult with investors reluctant to commit funds to risk assets, and opportunities in Institutional will be held back although we expect to see a continuation of positive net flows from institutional clients.'