The profit of £52m ($64m, €60m) for last year compared with £50m reported in 2015 and was helped by a rise in offshore FUM to £18.9b from £16bn in the previous year. International offshore net inflows of £700m were unchanged from 2015.
The company said the sluggish economic conditions and changes to regulation had adversely affected net flows in the Middle East, Singapore and Hong Kong.
European sales were also lower following last year’s UK pension reforms which had made international pension transfers less attractive for some UK expatriates, it said.
Diversification benefit
“The overall results for Old Mutual International remain strong, with good growth in funds under management, benefiting from geographical diversification,” said Peter Kenny, OMI’s managing director.
“As regulatory change and evolving client expectations continue to impact many jurisdictions, we remain focused on helping advisers adapt and build sustainable businesses.
“Economic conditions, such as the reduced oil price in the Middle East, and the uncertainty of a changing regulatory landscape, are a challenge, but we are strategically well positioned to capitalise on future opportunities.
“We remain focused on building our core growth markets, and see strong growth potential in Asia due to the rapid rise in wealth in the region and our growing reach in the high net worth space.”
OMW result dips
The company said OMI’s parent Old Mutual Wealth “has been able to maintain the level of net client cash flows (NCCFs) by having a geographically diversified business.
“Lower sales in Latin America and Asia, which were strong in 2015, were offset by strong sales in the UK and South Africa regions (up 57% and 22% respectively on prior year sales).
OMW said its newly-launched Old Mutual Compass Portfolio range, which combines the capabilities of Old Mutual Global Investors (OMGI) and fund manager Quilter Cheviot, is targeted specifically for international customers, had generated net inflows of £300m in 2016, and “traction is expected to build in 2017”.
For OMW in general the tough market conditions and costs arising from greater vertical integration resulted in a 15% drop in operating profits to £260m in 2016 from £307m for the previous year.
Gross sales from Old Mutual’s wealth management arm were up 5% at £21.1bn and its fund management group posted 19% sales growth. This was driven in part by its Global Equity Absolute Return fund, which now has close to £6bn in AUM.
However, OMGI’s funds under management FUM rose 27% to £31.4bn over 2016.
Net inflows into OMGI dropped by 31% to £2.4bn year-on-year but the firm pointed out this was “strong” when considering total UK net retail sales for the entire industry amounted to £4.7bn.
