London-based Quilter, Old Mutual’s former wealth management business, expects UK interest rates to peak later this year and to remain stable for some time before declining.
“What I don’t know yet is if a plateau looks like a small, little thing or as wide as Table Mountain,” CEO Steven Levin told Business Day in an interview on Tuesday after the release of its results for the six months to end-June.
High inflation and elevated interest rates has affected consumers and their disposable income, including some of Quilter’s clients who withdrew money to offset the impact of higher living costs and for some to repay their debt.
“Some of the older clients who may not themselves have mortgages may be helping out their children,” he said.
There was a modest recovery in the global market in the reporting period, but Quilter expects investment revenue will remain higher in 2024 before coming down.
But the company believes in the long-run the market and consumer confidence will improve when interest rates decline.
“This, in turn, supports higher customer savings, increased flows and provides a stronger long-term foundation to build client prosperity,” it said.
The company, which provides financial advice, investment solutions and a wealth platform, broke off from Old Mutual in 2018 in a four-way break-up of the former financial services conglomerate.
Valued at about R24.2bn on the JSE, Quilter reported that assets under management and administration (AuMA), the total market value of financial assets managed and administered on behalf of its customers, improved 3% year on year to £101.7bn (R2.4-trillion) as its adjusted profit before tax jumped 25% year on year to £76m.
Quilter’s core net inflows, the difference between money received from and returned to customers, of £700m were driven by a good performance by its High Net Worth and Affluent channels, while revenue improved 3% to £312m and the interim dividend was upped by a quarter to 1.5p per share. This was despite outflows rising 14% to £4.8bn.
Looking ahead, Levin said the adjusted profit for the full financial year will be “meaningfully ahead of current market expectations, assuming broadly stable markets”.
Quilter is also aiming to save £45m by the end of 2023 and an extra £50m by simplifying the business with moves such as another odd-lot offer.
The company will offer to buy the shares from those holding less than 200 at a 5% premium to reduce the complexity and cost to the company of “managing our unusually large shareholder base”.
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