The firm said that private banking net revenue was also affected by a further £7.9 million of loans losses on previously impaired loans, principally caused by the continued weakness in commercial property.

Private banking pre-tax profit was £11.8 million, down from £23.8 million in 2011. Costs fell by 9 per cent year-on-year to £82.6 million, Schroders said.

Schroders said its private bank attracted continued money in the UK private client and charities business, while outflows happened in the cash management service and Swiss business. There were total outflows of £300 million, contrasting to £200 million of inflows in 2011.

“In the short term we may see further net outflows, but longer term we remain positive about opportunities in private banking. We are streamlining the management structure, adding to our talent pool and strengthening our business development activities,” it said in a statement.

Across the firm as a whole, it logged a pre-tax profit in 2012 of £360 million, down from £407.3 million in 2011; earnings per share stood at 104.7 pence, down from 115.9 pence. The firm reported total net inflows of £9.4 billion, up almost three times the 2011 figure of £3.2 billion and total assets under management rose to £212 billion from £187.3 billion.  

In the asset management side of the business, net revenue declined by 3 per cent to £1.014.8 billion (2011: £1.041.5 billion) including performance fees of £28.4 million (2011: £36.6 million). The pre-tax profit was £348.5 million (2011: £389.4 million).