Rathbones ahead of expectations as Investec merger progresses

Rathbones, the wealth management firm, has reported an increase in operating income to £895.9m in 2024, surpassing analyst expectations as it continues its merger with Investec Wealth and Investment (IW&I).

The company's pre-tax profit nearly doubled last year, rising from £57.6m to £99.6m, according to its full-year results, as reported by City AM.

Underlying pre-tax profit also saw a significant increase, from £127.1m to £227.6m, exceeding the £224.7m forecast by analysts.

However, funds under management reached £109.2bn, slightly below the anticipated £110.1bn.

This marks the first full financial year since Rathbones' £839m merger with IW&I. Peel Hunt analyst Stuart Duncan commented on the merger, stating: "The Investec transaction gives the enlarged group scale, as well as a range of other strategic benefits to accompany the £60m of expected synergies."

He also noted that Rathbones' shares were trading at around 10 times the group's expected earnings for next year, lower than similar stocks in the sector.

Duncan added: "With a yield of over five per cent, we believe the shares provide lots of attraction in a sector that continues to offer long-term structural growth."

In its guidance, Rathbones indicated it was making "good progress" towards achieving an underlying operating margin of 30 per cent from September 2026, three years after the IW&I acquisition.

"2024 has been a very exciting year for the group as we began in earnest to bring Rathbones and IW&I together as one combined business committed to helping our clients achieve their longer-term financial goals," stated Paul Stockton, Chief Executive of Rathbones.