Old Mutual Wealth’s profits dropped by 31% year-on-year in the first six months of 2016 despite "very strong" net client cash flows, the company has reported.
Old Mutual Wealth delivered an operating profit of £104 million (€121.5 million) for the year to June 30, 31% lower than the £151 million attained in the first half of 2015. The firm attributed the fall to "operational challenges” and “tough markets", in particular noting a £21 million loss stemming from changes to customer fees, and lower resultant operating margins.
Nonetheless, net inflows were up 39% to £3.2 billion. Flows into Old Mutual Global Investors were "particularly good", with assets under management up 7% from the end of 2015 to £111.2 billion.
The firm warned that the second half of 2016 would likely be more challenging, expecting investor confidence to remain at a low as details of the UK's exit from the EU are worked through. It does not expect a repeat of the cash flows garnered in H1.
"This has been a challenging six months for Old Mutual Wealth, and the whole industry – indeed it was the worst period for net retail flows for the industry in 20 years,” said Paul Feeney, chief executive of Old Mutual Wealth.
Elsewhere in the report, the group stated it is in the final stages of restructuring its head office in London. Up to 60 staff will be gone by the end of the year, as the firm pursues savings of £10 million.
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