Rathbones Group (LON:RAT) used its 2025 full-year results presentation to highlight higher funds under management and administration (FUMA), improved profitability, and the completion of the IW&I client integration, while outlining a strategy focused on restoring sustainable organic growth. The board also emphasized shareholder returns through a higher dividend and an expanded share buyback program.
2025 results: higher FUMA, profit growth, and dividend increase
Group CFO Iain Hooley said FUMA rose by just under 6% to £115.6 billion at 31 December 2025, as asset values recovered after market volatility earlier in the year. He noted FUMA fell 5% at the end of the first quarter following the announcement of U.S. tariffs, before rebounding through the remainder of the year.
Underlying profit before tax increased 4.6% to £238.1 million, supported by synergy delivery and a recovery in the second-half margin. Underlying operating margin for the year was 25.8%, including a second-half margin of 27.5% after 24% in the first half. Statutory profit before tax rose 53.5% to £152.9 million, which Hooley attributed in part to lower integration costs.
Underlying basic EPS increased 5.5% to £1.705 per share, which management said was supported by profit growth and the impact of the share buyback. The company proposed a final dividend of 68p, taking the total dividend to 99p, up 6.5% from 2024, consistent with a progressive dividend policy referenced by the chair.
Flows and income mix: resilience in gross inflows, volatility in headline net flows
Hooley said gross inflows in the wealth management segment remained resilient at 9.5% of opening FUMA, despite disruption from client migration activity in the first half. Gross inflows were £0.7 billion higher in the second half. He also said gross outflows improved versus the prior year, though outflows were higher in the second half, partly due to an uptick ahead of the UK budget in November.
Net outflows in the fourth quarter were described as the lowest of the year at £64 million, representing 8% of full-year net outflows. As the business moved into 2026, Hooley said outflows were elevated in January due to tax payments to HMRC ahead of the 31 January deadline, which he linked to clients crystallizing capital gains ahead of the government’s first budget in October 2024. Management also pointed to distortions from charities mandates and execution-only services, noting that headline net flows can be volatile and that the key focus is improving flows in core discretionary private client FUMA.
In asset management, management characterized the environment as challenging for UK managers, particularly single-strategy funds. However, Hooley said several flagship strategies remained competitive and the business launched two new strategies during the year: a charities authorized investment fund (CAIF) and the Next Japan Asia Fund, though both were in early stages and had limited impact on 2025 flows.
All principal income lines increased year-on-year. Fee income growth reflected higher average FUMA, while commission income benefited from higher transaction volumes as markets recovered and activity increased ahead of the November budget. Hooley said net interest income increased partly due to reclassification of interest on IW&I portfolios following migration, and also due to “income synergies” from Rathbones’ banking model versus IW&I’s client money model. He said base rate reductions had so far had limited impact on the net interest margin, citing maintained deposit margins and the group’s treasury strategy, which delays the impact of rate changes.
IW&I integration: synergies exceed target, integration costs decline
Management said the integration of IW&I clients onto the Rathbones operating platform has been completed, describing it as a major milestone underpinning a more scalable organization. Hooley reported synergy delivery of £76 million on an annualized run-rate basis at 31 December 2025, exceeding the £60 million target and achieved ahead of the original September 2026 timeline. Synergies in the second half were driven predominantly by decommissioning the IW&I operational platform following client migration.
With the target exceeded and integration complete, management said 2025 marks the end of the synergy delivery period related to the IW&I integration, while also pointing to further efficiency opportunities during 2026 as systems and processes are optimized.
On non-underlying costs, Hooley said amortization of intangible assets was £45 million, while integration costs fell significantly from their 2024 peak. The company expects integration-related costs to continue up to and including 2027, primarily linked to share-based awards expensed over their vesting period. Rathbones maintained its expectation that total integration costs will remain within its original £177 million guidance. The effective tax rate for 2025 was 26.6%, and management expects it to remain around that level in 2026.
Capital returns: completed £50 million buyback, £20 million extension planned
The chair highlighted Rathbones’ long-standing capital return discipline and said the company launched its first-ever £50 million share buyback last year. Hooley said the company completed that program on 16 February. Management also announced an additional £20 million extension to the buyback, subject to regulatory approval.
In Q&A, Hooley said the additional £20 million could be accommodated within the existing program framework, noting that Investec does not participate in the current program and that buybacks concentrate Investec’s holding back toward its original level at the time of the transaction. He added that going beyond that level would be more complex and require a process to manage Investec’s participation. Management reiterated that organic growth is the priority under its capital allocation framework, with a “high” threshold for inorganic growth.
2026 outlook: investment and efficiency actions underpin margin target
Hooley provided detailed guidance, saying Rathbones expects to reach a 30% underlying operating margin in Q4 2026. He said margin in the first half of 2026 is expected to be “notably lower” than the second half due to a one-off investment to consolidate client lifecycle and relationship management systems using Salesforce and Xplan, replacing InvestCloud. This is expected to increase first-half costs by £9 million and costs for the full year by £7 million. Management expects the full-year 2026 margin to be broadly consistent with the second half of 2025, in the “upper 20s.”
The Q4 2026 margin target is based on assumptions including 3% FUMA growth in 2026, stable inflation, and interest rates in line with current market expectations. Hooley said the company assumes the UK base rate will be 3.25% by the end of 2026. Commission income is expected to be about 5% lower as volumes normalize, while net interest income is expected to be broadly flat year-on-year due to offsetting factors including lower income margin from rate cuts and a full-year benefit from client money balances moving to Rathbones’ banking model.
Management said 2026 costs would benefit from a full year of synergy delivery, representing an additional £60 million benefit, while staff costs are expected to be about £10 million higher, primarily due to inflationary salary increases. Integration costs reported within non-underlying items are expected to be around £70 million in 2026.
During Q&A, management said the decision to move away from InvestCloud reflected that it “hasn’t delivered everything we wanted it to,” and said Salesforce and Xplan are already used within the group, supporting confidence in implementation over the first nine months of 2026. The company also reiterated its progressive dividend policy without setting a specific payout ratio.
In the strategic presentation, new Group CEO John Sorrell said Rathbones is focused on execution to restore sustainable organic growth, acknowledging that recent net flows “have not been where they’ve needed to be.” He emphasized strengthening advice and financial planning penetration (which he said is around 14% by FUMA and 11% by client), investing in technology and process simplification, and using AI tools to improve productivity while keeping “trust and empathy and judgment” central to client relationships. Sorrell also said the firm is not looking to move into the mass market, but to expand reach within its targeted segments and client profiles.
About Rathbones Group (LON:RAT)
With roots dating back to 1742, Rathbones is one of the UK’s leading providers of investment and wealth management services for private clients (individuals and families), charities, trustees and professional partners. Rathbones’ purpose is to help more people invest their money well, so they can live well.
Rathbones has been trusted for generations to manage, preserve and grow clients’ wealth and services include discretionary investment management, fund management, tax planning, trust and company management, financial advice and banking services.
