Drop in scheme levy lifts Brewin Dolphin

Brewin’s half year profits rose 3.3 per cent after its bill for helping finance an industry-wide compensation scheme came in much lower than last year.

Pre-tax profits rose to £12.3m for the six months to March 31 after the levy imposed by the Financial Services Compensation Scheme fell to £553,000 from over £6m last year.

Executive chairman Jamie Matheson called the company’s results “reasonably resilient in quite awkward circumstances.”

“It may be a sunny day here in London but generally speaking it’s rather stormy out there,” he said.

The company warned that regulatory costs will remain high as the industry is shaken up in the wake of the financial crisis.

Michael Craven, head of Brewin Dolphin in Leeds, said: “Markets have undoubtedly been challenging for some time, for us and for our clients, but we have been busy here in Leeds, enhancing our services and making sure clients’ portfolios are well positioned.

“Quality companies with strong balance sheets and good dividend policies have shown themselves to be capable of navigating some stormy markets over the years and we are not at all down-hearted.”

Mr Matheson said client investment portfolios were positioned defensively early in the financial crisis and so activity was lower, impacting earnings.

“We positioned clients in a defensive stance quite early on, which is absolutely the right thing to do, but once you’ve got there that implies a lowering of activity,” he said.

Adjusted pre-tax profits excluding redundancy costs, the industry levy and amortisation of client relationships dropped by 17.1 per cent.

The company is halfway through a strategic review, cutting costs and moving to a fee-based business model.

Mr Matheson said the process should wrap up by the start of 2014, mitigating much of the increased regulatory cost burden.

Total funds under management rose 7.1 per cent to £25.7bn, driven largely by an 11 per cent increase in its discretionary business.

“While it would be easy to become distracted by the impact of the economic and political difficulties in Europe, there remains a growing demand for our services,” said Mr Matheson.