The past 12 months have been a boom period for Perth’s big stockbroking firms, but the year ended on a sour note for the state’s largest broker, Patersons Securities, which has run into compliance problems at its Canberra branch.
The past 12 months have been a boom period for Perth’s big stockbroking firms, but the year ended on a sour note for the state’s largest broker, Patersons Securities, which has run into compliance problems at its Canberra branch.
Patersons, Euroz Securities and Hartleys all enjoyed higher profits in the year to June 2005, reflecting the buoyant market and their role in managing numerous floats and capital raisings.
But not all stockbrokers have enjoyed boom-time profits, judging by the results of listed Melbourne-based broking firm Tolhurst Noall, which has an office in Perth.
Patersons increased total revenue by 40 per cent to $66.3 million, while its net profit increased by a modest 8.5 per cent to $3.5 million, mainly because a large chunk of the higher revenue was paid to staff.
Euroz Securities achieved even faster growth, with revenue up 48 per cent to $42.2 million and net profit up 49 per cent to $9.2 million.
Hartleys also had a good year, with revenue up 45 per cent to $25.0 million (compared with the eight months to June 2004) and net profit doubling, to $4 million.
In contrast, Tolhust Noall increased revenue by a modest 7.1 per cent to $38.8 million and its underlying profit, after excluding various one-off factors, was up just 4.7 per cent to $2.9 million.
Tolhurst’s net profit actually fell by 22 per cent, which the company attributed to increased compliance costs, higher spending on technology and reduced margins on retail broking.
The improved results reported by the three big broking firms in Perth flowed directly to staff, led by Patersons where three unnamed directors earned in excess of $1 million.
Patersons’ higher profit followed a period of rapid national expansion, with the privately owned firm now having 230 staff and 10 offices (seven in WA and three interstate).
The most controversial move was into Canberra, where Patersons’ former partner Ord Minnett disputed the recruitment of branch manager Eric Hawley.
Patersons resolved that dispute, but Mr Hawley has recently left the firm following allegations of ‘churning’ and unauthorised trading.
Patersons executive chairman Michael Manford defended the company’s compliance policies, saying his firm uncovered the problems in Canberra and was now seeking to address clients’ concerns.
He emphasised that the problems were confined to Canberra and did not reflect generally on the firm’s national expansion strategy.
Mr Manford added that Mr Hawley and other advisers in the Canberra office had long-standing client relationships, and that the high-risk options trading activity that led to the problems were not instituted recently.
“The book and the clients came across to Patersons with those strategies already in place,” Mr Manford said.
