Schroders Plc · LSE:SDR
Schroders — H1 2023 Earnings Presentation
28 slides from Schroders's earnings presentation, Jul 27, 2023
Slide 1: Half-Year Results 2023
HALF-YEAR RESULTS 2023 July 2023 Peter Harrison Group Chief Executive Richard Keers Chief Financial Officer
Slide 2: Half-Year Results 2023 - Peter Harrison
HALF-YEAR RESULTS 2023 27 July 2023 Peter Harrison Group Chief Executive
Slide 3: Our strategy has enabled positive NNB in a challenging environment
Our strategy has enabled positive NNB in a challenging environment H1 2023 H2 2022 H1 2022 Strategic growth areas continue to deliver Net operating income (£m) 1,211.9 1,235.2 1,240.3 Operating profit (£m) 341.4 316.1 406.9 Our diversification has proven beneficial through a AUM (£bn) 726.1 737.5 77
Slide 4: Self-reinforcing momentum
Self-reinforcing momentum Enhancing growth potential across our four businesses Two of the first three LTAFs authorised in the market Self-reinforcing Lloyds Banking Group referrals momentum boosting regional growth in Wealth Lloyd’s of London Investment Platform launches Schroders Capital-managed P
Slide 5: Continue growing one of the UK's leading Wealth Managers
Continue growing one of the UK’s leading Wealth Managers Capitalising on our unique growth opportunities: Capital Markets Day update Continue leveraging Cazenove Capital’s differentiated position in the U/HNW bracket and the newly launched regional offices Benchmark growing its share of the UK advis
Slide 6: Our purpose is to provide excellent investment performance
Our purpose is to provide excellent investment performance Three-year longevity 5.4 5.2 5.2 77% 73% 4.7 4.6 outperforming over 3 years outperforming over 5 years 2019 2020 2021 2022 H1 2023 Note: Please refer to page 7 of the Half-year 2023 Press Release on our investor relations website for more in
Slide 7: Strategic areas of growth driving positive net new business of £11.8 billion
Strategic areas of growth driving positive net new business of £11.8 billion NNB by business area £bn Inflows of £5.7 billion in H1 Wealth Management 3.7 Strategic growth Schroders Capital areas Mutual Fund flows resilient in 1.8 “risk-off” environment Schroders Solutions 6.3 Rebound in Solutions fl
Slide 8: Wealth Management delivering sustained NNB growth
Wealth Management delivering sustained NNB growth AUM progression Advised NNB rate £bn % 9% 7.9% 120 CAGR 8% Comprehensive offering 7.2% 101.6 102.6 6.6% covering entire Wealth spectrum 98.1 100 89.6 6% 80 75.3 £3.7bn NNB represents compelling growth from a 60 4% range of target client segments 3.1%
Slide 9: Schroders Capital: a complete private markets offering
Schroders Capital: a complete private markets offering Stable AUM despite private assets slowdown in the first half AUM progression Schroders Capital composition £bn % 13% 80 CAGR Balanced business meeting 68.3 68.2 3% client demand for 70 14% multi-private asset solutions 60 53.7 37% 50 46.1 H1 202
Slide 10: Solutions: inflows demonstrate strong reputation
Solutions: inflows demonstrate strong reputation Rebound in NNB following successful client-centric approach to gilt crisis AUM progression Rebound of NNB post the gilt crisis £bn £m 12% 250 CAGR 8 £6.3bn of NNB in H1 and 225.7 6.3 6.3 healthy pipeline for H2 210.2 212.1 6 Gilt 200 192.3 198.1 crisi
Slide 11: Mutual Funds performing robustly given market sentiment
Mutual Funds performing robustly given market sentiment Institutional mix shift is leading to margin improvement NNB by region £bn Continued positive NNB in (1.0) APAC Sustainability and Thematics (1.0) 0.1 Latin America Institutional outflows primarily (0.3) from lower-margin mandates (1.1) North A
Slide 12: Accessing China's long-term future market growth prospects
Accessing China’s long-term future market growth prospects Licences via wholly-owned entities and Bank of Communications’ partnerships Assets under management: China’s growth potential RMBtrn Comprehensive market 350 access via: +9% p.a. ~280 300 Strategic partnerships – BOCOM Schroders FMC 250 +3%
Slide 13: Half-Year Results 2023 - Richard Keers
HALF-YEAR RESULTS 2023 July 2023 Richard Keers Chief Financial Officer
Slide 14: Results summary
Results summary H1 2023 H2 2022 H1 2022 Strategic growth areas Net operating revenue Net operating revenue (£m) 1,169.8 1,183.4 1,178.0 £m 5% 563.7 600 557.4 535.2 Net operating income (£m) 1,211.9 1,235.2 1,240.3 199.7 210.0 194.6 400 Operating expenses (£m) (870.5) (919.1) (833.4) 147.4 144.8 137.
Slide 15: Average AUM trend
Average AUM trend Average AUM (excluding Associates and JVs) £bn 680 660 640 636.7 646.2 627.5 620 627.2 600 580 Q1 Q2 Q3 Q4 Q1 Q2 2021 2022 20232023 Actual AUM Average AUM Average AUM excluding FX 1Excluding Associates and JVs. Average AUM1 up 1% on H2 2022 average AUM Closing AUM1 up 5% on 31 Dece
Slide 16: Net operating income: year-on-year comparison
Net operating income: year-on-year comparison H1 2022 to H1 2023 £m 1,300 1,240 11 17 1,212 26 16 1,200 (7) (5) (4) 202 (76) (6) 1,100 216 1,000 900 1,038 996 800 700 H1 H12022 1 2 2022 Markets & Mix FX NNB Acquisitions Performance Net Banking Associates 3 RE Transaction Other H1 H1 2023 2023 fees a
Slide 17: Net operating income: movement since H2 2022
Net operating income: movement since H2 2022 H2 2022 to H1 2023 £m 1,300 28 1,235 1 6 1,212 1,200 (34) (6) (7) (6) (5) 204 1,100 216 1,000 900 1,031 996 800 700 1 H2H22022 2022 Markets & Mix FX NNB Performance Net Banking Associates and RE Transaction Associates 2 Other H1 H1 2023 2023 fees and carr
Slide 18: Wealth Management
Wealth Management Net operating revenue Margins Net operating revenue £m Bps1 H1 2023 FY 2022 £m H1 2023 H1 2022 250 Advised 58 55 Advised 179.7 159.3 210.0 Platform 15 15 Platform 12.4 13.3 194.6 199.7 200 Managed 17 18 Managed 17.9 22.0 30.2 12.9 24.0 21.3 18.2 Total 42 40 Total 210.0 194.6 18.0 1
Slide 19: Asset Management
Asset Management Net operating revenue Margins Net operating revenue £m Bps1 H1 2023 FY 2022 £m H1 2023 H1 2022 983.4 983.7 1,000 959.8 Schroders Capital 58 61 Management fees 920.2 944.8 900 Schroders Solutions 12 13 Performance fees 13.1 15.8 Mutual Funds 70 71 Net carried interest 19.5 5.3 800 37
Slide 20: Interests in Joint Ventures and Associates
Interests in Joint Ventures and Associates Share of profit of Joint Ventures and Associates1 £m H1 2023 Other Asset Other Wealth 41.6 BOCOM Axis AM Mgmt SPW WM Mgmt Total 40 Net operating income (£m) 164.5 54.0 31.2 249.7 63.0 0.8 63.8 313.5 36.0 34.9 1 Profit after tax (£m) 92.1 24.8 2.5 119.4 1.8
Slide 21: Operating expenses
Operating expenses Compensation costs Non-compensation costs £m £m 585.7 333.4 600 350 535.5 558.8 311.7 297.9 300 450 250 200 300 150 100 150 50 0 0 H1 2022 H2 2022 H1 2023 H1 2022 H2 2022 H1 2023 Continued focus on costs, including through Technology and Wealth operations restructurings Schroders
Slide 22: Group Capital composition
Group Capital composition Capital base Capital allocation £m £m 4,480 4,346 4,480 4,346 655 4,000 643 4,000 233 101 1,538 1,550 3,000 1,346 1,371 3,000 512 127 481 57 33 51 2,000 2,000 2,246 2,231 2,246 2,231 1,000 1,000 0 0 31-Dec-22 30-Jun-23 31-Jun-23 31-Dec-22 30-Jun-23 Other items1 Overall regu
Slide 23: Profit before tax
Profit before tax £m H1 2023 H2 2022 H1 2022 Operating profit 341.4 316.1 406.9 Central costs (23.4) (25.6) (23.2) Net gain/(loss) on financial instruments and interest income 23.9 32.9 (33.8) Central costs less net gain/(loss) on financial instruments and interest income 0.5 7.3 (57.0) Underlying p
Slide 24: Outlook
OUTLOOK
Slide 25: Outlook for 2023 and beyond
Outlook for 2023 and beyond Deliver against our Strategic growth Strong operating Our diversified growth ambitions in enabling resilient platform delivering business model will Wealth Management, performance through good leverage for enable us to deliver Schroders Capital and challenging future grow
Slide 26: Questions
QUESTIONS
Slide 27: Thank you
DFA GAD PA wadI DI ZW ( IANK YOU
Slide 28: Forward looking statement
Forward looking statement These presentation slides may contain forward-looking statements with respect to the financial condition, performance and position, strategy, results of operations and businesses of the Schroders Group. Such statements and forecasts involve risk and uncertainty because they