Announcement from Lloyds brings 'welcome clarity' at wealth managers

Speculation over a possible disposal of Lloyds' 60 per cent holding, as part of a broader asset sale plan, had been seen by analysts as holding back St James's share performance.

The announcement came as St James's posted first half earnings at the top end of market expectations.

Analysts at JP Morgan Cazenove said the announcement had the effect of "removing an overhang" on the shares.

"Lloyds has indicated that it has no intention to sell down or dispose of its stake in St James's Place at this time," the company said in a statement.

Chief executive David Bellamy said: "I welcome the clarity. We want to focus on the business rather than external things that are a bit of a distraction."

St James's beat analyst expectations with a 60 per cent jump in operating earnings to 162.1m in the first half. Sales also beat analysts' forecasts.

Mr Bellamy said low returns on cash amid low interest rates, as well as higher tax rates for the rich, boosted asset inflows as clients seek higher, more tax efficient investments.

The group posted a net inflow of funds under management of 1.5bn over the period, a 50 per cent increase on a year earlier and evidence investors had not been in a rush to revert to cash.

Total funds under management stood at 22.4bn and the company also announced a 10 per cent increase in its dividend to 2.025p per share.

"The figures came in above expectations on nearly all measures," said Bank of America Merrill Lynch analysts.

Lloyds took over HBOS's 60 per cent stake in St James's last year when it took over the troubled bank.

St James's said total new business on an annualised premium equivalent (APE) basis – a combination of regular and single premiums – was 292.6m in the first half, up 44 per cent on 2009.

Analysts at Numis Securities had forecast an APE for the first half of 270m. APE is St James's most closely watched measure of new business.

Rival Rathbones also said it is attracting new clients amid falling equity markets.

It reported a total net organic growth of funds – excluding the impact of markets – of four per cent.

This represents a slight deceleration from six per cent growth in 2009, which the company attributed to clients taking money out of portfolios to supplement their income.