SYDNEY, May 2 (Reuters) - Australian asset manager Pendal Group reported a 26 percent fall in first-half cash earnings on Thursday, triggering the sharpest fall in its shares in close to three years.
Shares fell nearly 13 percent - the most since June 2016 - to A$8.05 after the company said a 91 percent plunge in performance fees eroded earnings and sent funds under management down about A$700 million in the first half to March 31.
“The market returns in the December quarter were the worst on record since the September 2011 quarter, and despite a rebound in market returns in the March quarter, the volatility over the half has led to a significant increase in risk aversion from clients,” Chief Executive Officer Emilio Gonzalez said in a statement.
The global investment manager has been hit by a progressive unwinding of its relationship with Westpac’s funds management unit, which accounts for about 20 percent of its funds under management.
Westpac withdrew A$1.5 billion as part of the company’s move to consolidate its investment management business and its exit from financial advice, the last of Australia’s Big Four banks to do so, as regulators increase pressure on the scandal-ridden financial sector following an enquiry.
Pendal’s funds under management were A$100.9 billion at the end of March, down A$0.7 billion for the half led by the lower performance in markets. Excluding Westpac’s withdrawal, the group, which manages portfolios for investors worldwide, reported positive net flows.
“We remain focused on expanding our investment and distribution capabilities,” Gonzalez said.
Elsewhere, in a limited quarterly update, Australia’s oldest wealth manager, AMP Ltd, posted a near nine-fold increase in cash outflows at its wealth management unit in the wake of damaging revelations of misconduct uncovered by the Royal Commission last year. (Reporting by Paulina Duran; Editing by Subhranshu Sahu)