(Bloomberg) -- Shares of St. James’s Place Plc surged the most in 16 years after the UK’s largest wealth manager reported inflows and vowed cost savings with a plan to reinvest part of that money into growth.
The investment firm, which has been battling customer complaints over its fees, said in a statement Tuesday that it aims to save £80 million ($103 million) in 2025 and 2026. Its “ambition” between now and the end of 2026 is to deliver cuts to its cost base, which will reach pretax “full run-rate savings of £100 million” by 2027, with an anticipated cumulative net savings of almost £500 million through 2030, it said.
An underlying cash result of £205.2 million beat the £198.8 million consensus in a Bloomberg survey. Chief Executive Officer Mark FitzPatrick said in the statement that he expects the cash result to accelerate in 2027 and beyond, doubling between 2023 and 2030.
Shares jumped as much as 25% in London, the biggest intraday gain since 2008.
St. James’s Place, which has been criticized over the years for having high charges and a convoluted fee structure, said in February that it set aside £426 million in provisions for potential refunds after reporting a “significant increase” in customer complaints in late 2023. This was in the wake of consumer duty rules laid out by the nation’s financial regulator, which say that advisers need to offer value for the money paid by clients for their services.
FitzPatrick said the firm is on track to deliver its new fee structure in the second half of 2025, in line with its previous guidance, while it remains “comfortable” with the proposed provision amount. Earlier, the firm also cut investor payouts and capped annual shareholder distributions for three years in a bid to save money.
First-half net inflows were at £1.9 billion and assets under management reached a record £181.9 billion by the end of June.
The results were better than expected, Morgan Stanley analyst Ashik Musaddi wrote in a note, highlighting the beat on underlying cash profit, while Jefferies analyst Julian Roberts wrote that the provision amount staying unchanged “may be comforting.” RBC analyst Ben Bathurst noted positive developments on several fronts, including a new set of cost-saving targets.
“We have a lot of hard work ahead of us over the next 24 months to strengthen our core and execute our existing programmes of work, helping us to become a more efficient and effective business,” FitzPatrick said in the statement.
The company, which didn’t elaborate on how it would achieve those savings, said half of that money will be invested back into the business between 2025 and 2030. It also announced an interim share buyback of £32.9 million and an interim dividend of 6 pence a share.
In June the wealth manager named Caroline Waddington, an ex-Credit Suisse banker, as its new chief financial officer.
--With assistance from Joel Leon.
(Updates with analysts’ comment in seventh paragraph.)
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