Market lull hits Brewin Dolphin’s commission

Subdued market activity in the final three months of last year led to a sharp drop in commission income for wealth manager Brewin Dolphin.

The firm, which employs about 400 at its offices in Scotland, said the trend had continued into 2012 but other income streams were holding up well.

Commission income dropped 24.4 per cent to £17.6 million, a trading update yesterday revealed, but improvements to other income streams meant total revenues were £59.7m, a fall of just 0.8 per cent.

Funds under management increased 3.8 per cent in the three months, to £24.9 billion.

Broker Numis downgraded Brewin to “sell” following the update, which fell well short of its expectations.

Analyst David McCann said: “This is the same trend that Charles Stanley reported last week. It appears private client activity levels are well down – bad news if you are reliant on commissions for a significant part of your income.”

As of yesterday, Brewin’s corporate advisory and broking division is trading as a separate entity following the management buy-out supported by Spanish investment banking business N+1. Brewin has retained a 14 per cent interest in the new business, called N+1 Brewin, which includes about 15 staff in Edinburgh.

Sandy Fraser, N+1 Brewin’s head of corporate finance, said that, although recent months have been tough, the partnership with Europe-focused N+1 provided a “strong differentiator” that will help win business.

“It certainly creates new opportunities,” he added. “Because we are no longer purely domestically focused it means we can offer our clients opportunities in other European markets.”

Fraser said the business was picking up new clients and hoped to take advantage of changes in the market as competitors merge or downsize, especially as N+1 Brewin starts with around £5m in the bank.