Market Shifts: Rathbones and Metro Bank Navigate Turbulent Waters
May 9, 2025, 10:55 am
The financial landscape is a tempest. Two firms, Rathbones and Metro Bank, are charting their courses through the storm. Rathbones faces a dip in wealth management fees, while Metro Bank rides a wave of renewed profitability. Both companies reflect the broader market's challenges and opportunities.
Rathbones Group is feeling the pinch. The first quarter of 2025 brought a three percent drop in wealth management fees. The culprit? Market turmoil following the introduction of Trump’s tariffs. This upheaval has sent ripples through the investment community. Rathbones reported a five percent decline in assets under management by the end of March. Investors are pulling back, and new money is scarce. The firm lost £784 million in outflows, with the asset management arm taking the brunt of the hit.
The wealth management division, however, bore the heaviest losses. It lost £4.4 billion in market performance, while the asset management side saw a mere £137 million in losses. The bespoke portfolios, which represent less than half of Rathbones' assets, accounted for nearly three-quarters of these market losses. It’s a stark reminder of how concentrated risks can lead to significant fallout.
Despite these challenges, Rathbones is not without its silver linings. Net operating income dipped only 1.6 percent across the group. This is thanks to rising fees from advisory services. However, the outlook remains cautious. City broker Peel Hunt has downgraded Rathbones' earnings forecasts by six percent. The stock price target has been slashed from 2,225p to 2,100p. The market's volatility is a heavy cloud hanging over the firm.
Interestingly, Rathbones has a unique position in the market. According to RBC estimates, it has the lowest proportion of revenue linked to asset-based fees in the sector. This means its profits are less vulnerable to performance dips. The firm’s share price has only dropped 1.5 percent since the start of 2025, a stark contrast to other financial firms that have seen double-digit declines.
Analysts are cautiously optimistic. They see 2025 as a potential turning point for Rathbones. The integration of Investec’s wealth and management division is nearing completion. This merger, valued at £839 million, could unlock new growth avenues. The migration of clients is over 90 percent complete. There’s a belief that as market conditions improve, Rathbones will return to growth. Wealth management remains a long-term strategic opportunity.
In contrast, Metro Bank is riding a wave of optimism. The bank reported a significant increase in profits for the first quarter of 2025 compared to the second half of 2024. Shares surged nearly four percent in early trading. Metro Bank is confident it will meet its full-year targets, buoyed by a “structurally higher” net interest margin. This margin reflects the bank's profitability from lending, a crucial metric in the banking world.
Metro Bank's strategy is evolving. The firm is pivoting towards specialist mortgages and small business lending. This shift is part of a broader strategy to optimize deposits and improve asset rotation. Cost reduction efforts are on track, aligning with expectations. However, the bank did report a four percent drop in deposits, down to £13.8 billion from £14.5 billion at the end of 2024. This decline is attributed to the maturation of higher-cost fixed-term deposits and a focus on reducing excess liquidity.
Total net loans fell six percent from December 2024. This decline reflects a £584 million sale of its personal loan portfolio, which generated £11 million in gains for the bank. Analysts from Peel Hunt noted that by rapidly downsizing exposure to legacy unsecured personal loans, Metro Bank can free up funding. This will allow the bank to scale up its commercial and corporate lending, which offers higher risk-adjusted returns.
Chief Executive Daniel Frumkin expressed optimism about the bank's trajectory. He highlighted growth in corporate and commercial lending, emphasizing the bank's relationship banking model. This differentiation is crucial in a competitive market. As the UK economy seeks to recover, Metro Bank aims to play a vital role in supporting its customers.
Both Rathbones and Metro Bank illustrate the dual nature of the financial sector. One firm grapples with the fallout from market volatility, while the other capitalizes on strategic shifts to enhance profitability. The financial landscape is ever-changing, like a river that carves new paths through the earth. Companies must adapt or risk being swept away.
In conclusion, Rathbones and Metro Bank are navigating their respective challenges with distinct strategies. Rathbones is focused on stabilizing its wealth management division amidst market turbulence. Metro Bank is seizing opportunities for growth in a recovering economy. Both firms are poised to shape their futures, but the road ahead is fraught with uncertainty. The financial world is a dance of risk and reward, and only the nimble will thrive.
Rathbones Group is feeling the pinch. The first quarter of 2025 brought a three percent drop in wealth management fees. The culprit? Market turmoil following the introduction of Trump’s tariffs. This upheaval has sent ripples through the investment community. Rathbones reported a five percent decline in assets under management by the end of March. Investors are pulling back, and new money is scarce. The firm lost £784 million in outflows, with the asset management arm taking the brunt of the hit.
The wealth management division, however, bore the heaviest losses. It lost £4.4 billion in market performance, while the asset management side saw a mere £137 million in losses. The bespoke portfolios, which represent less than half of Rathbones' assets, accounted for nearly three-quarters of these market losses. It’s a stark reminder of how concentrated risks can lead to significant fallout.
Despite these challenges, Rathbones is not without its silver linings. Net operating income dipped only 1.6 percent across the group. This is thanks to rising fees from advisory services. However, the outlook remains cautious. City broker Peel Hunt has downgraded Rathbones' earnings forecasts by six percent. The stock price target has been slashed from 2,225p to 2,100p. The market's volatility is a heavy cloud hanging over the firm.
Interestingly, Rathbones has a unique position in the market. According to RBC estimates, it has the lowest proportion of revenue linked to asset-based fees in the sector. This means its profits are less vulnerable to performance dips. The firm’s share price has only dropped 1.5 percent since the start of 2025, a stark contrast to other financial firms that have seen double-digit declines.
Analysts are cautiously optimistic. They see 2025 as a potential turning point for Rathbones. The integration of Investec’s wealth and management division is nearing completion. This merger, valued at £839 million, could unlock new growth avenues. The migration of clients is over 90 percent complete. There’s a belief that as market conditions improve, Rathbones will return to growth. Wealth management remains a long-term strategic opportunity.
In contrast, Metro Bank is riding a wave of optimism. The bank reported a significant increase in profits for the first quarter of 2025 compared to the second half of 2024. Shares surged nearly four percent in early trading. Metro Bank is confident it will meet its full-year targets, buoyed by a “structurally higher” net interest margin. This margin reflects the bank's profitability from lending, a crucial metric in the banking world.
Metro Bank's strategy is evolving. The firm is pivoting towards specialist mortgages and small business lending. This shift is part of a broader strategy to optimize deposits and improve asset rotation. Cost reduction efforts are on track, aligning with expectations. However, the bank did report a four percent drop in deposits, down to £13.8 billion from £14.5 billion at the end of 2024. This decline is attributed to the maturation of higher-cost fixed-term deposits and a focus on reducing excess liquidity.
Total net loans fell six percent from December 2024. This decline reflects a £584 million sale of its personal loan portfolio, which generated £11 million in gains for the bank. Analysts from Peel Hunt noted that by rapidly downsizing exposure to legacy unsecured personal loans, Metro Bank can free up funding. This will allow the bank to scale up its commercial and corporate lending, which offers higher risk-adjusted returns.
Chief Executive Daniel Frumkin expressed optimism about the bank's trajectory. He highlighted growth in corporate and commercial lending, emphasizing the bank's relationship banking model. This differentiation is crucial in a competitive market. As the UK economy seeks to recover, Metro Bank aims to play a vital role in supporting its customers.
Both Rathbones and Metro Bank illustrate the dual nature of the financial sector. One firm grapples with the fallout from market volatility, while the other capitalizes on strategic shifts to enhance profitability. The financial landscape is ever-changing, like a river that carves new paths through the earth. Companies must adapt or risk being swept away.
In conclusion, Rathbones and Metro Bank are navigating their respective challenges with distinct strategies. Rathbones is focused on stabilizing its wealth management division amidst market turbulence. Metro Bank is seizing opportunities for growth in a recovering economy. Both firms are poised to shape their futures, but the road ahead is fraught with uncertainty. The financial world is a dance of risk and reward, and only the nimble will thrive.