Gaining share in challenging markets
Share (L:SHRE) has once again taken market share (8.41% of peer group revenue in Q315 vs 8.16% in Q215 and 7.62% in Q314), continuing its multi-year trend. However, trading conditions remain challenging with market dealing commissions falling, regulatory pressure on fees and maturing high rate accounts being reinvested at lower yields. Overall revenue was down 1% on Q314 and, taking account of a continuation of this subdued trading for the rest of the year, we have reduced our estimates.
Q315 details
Dealing commission (46% of revenues) increased by 12% (peers down 17%) on Q314, supported by the Barclays (L:BARC) certificated trading business, which commenced in April 2015, as well as strong EIS administration revenues. Fee income (46% of revenues) decreased by 2% on Q314 (peers down 25%), significantly affected by the impact of the Retail Distribution Review on trail income, where Share took the pain earlier than many peers. Interest income (8% of revenues) reduced by 38% on Q314 (peers up 22%). While cash balances have been rising, Share has seen high-interest term deposits – which were secured by building society mortgage portfolios – mature and the options for reinvestments post July 2014 changes in regulatory client asset rules have all been at lower interest rates. The timing of deposit maturity affects trends in any particular quarter.
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