Brewin Dolphin Gains After Commissions and Fee Income Rise

Brewin Dolphin Holdings Plc, a U.K. stockbroker and fund manager, climbed the most in almost four weeks in London trading as rising fee income offset the effect of a ban on commissions paid by fund managers.

Total income rose 14 percent to 73.3 million pounds ($111.5 million) in the third quarter to June 30, up from 64.5 million pounds a year earlier, the London-based company said in a statement today. Core fee and commission income was 27 percent higher than the same period last year, while “trail income” fell after the implementation of the Retail Distribution Review.

Brewin repeated that it expects operating margins to surpass 25 percent by 2016. Former Morgan Stanley executive David Nicol became Brewin’s chief executive officer in March after the resignation of executive chairman Jamie Matheson, who began a review aimed at improving profitability near the end of his eight-year tenure as executive chairman. Brokers have been charging more up-front fees to clients in the wake of the retail distribution review.

“It will be difficult for management to retain their jobs post-2016 should they not achieve these now well-defined targets, so we believe they are well-incentivized,” David McCann, an analyst at Numis Securities Ltd. with an add rating on the shares, wrote in an e-mailed note.

Total income beat Numis’s estimate of 70 million pounds, probably because trail income is dropping off less quickly than expected, McCann wrote. Funds under management declined 2.1 percent to 27.5 billion pounds, below Numis’s 27.6 billion-pound estimate.

Brewin Dolphin shares rose 3.9 percent to 253.70 pence, the steepest gain since July 4.

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