Schroders, the independent UK merchant bank, saw its share price dip 54p to £13.93 1 /2 yesterday, after warning it would have trouble sustaining profit levels.
Schroders reported pre-tax profits up 35 per cent at £115.9 million in the six months to June 30, as surging profits from fund management offset flatter investment banking revenues.
But the group cautioned that conditions for its businesses would become more uncertain with elections on the way in the US and the UK, and with equity markets now reaching all-time peaks.
Merchant and investment banking profits reached £50.7m, up from £41.7m a year earlier but down from what Schroders called the ''exceptional levels'' of the second half of 1995, when profits in this business totalled £62.6m.
Peter Sedgwick, vice-chairman, said expansion into the securities business was going ''according to plan,'' with good results from continental Europe and the US.
Recast of south-east Asian operations has been completed, but its fruits have yet to materialise. Broking in the UK will start next year.
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The fast-growing fund management division, meanwhile, produced a 49 per cent jump in profits to £65.2m.
Funds under management climbed to £ 83.4bn at June 30, compared with £74bn at the end of last year.
Although the value of investments appreciated only modestly, Schroders attracted pound5.4bn in net new money.
Sedgwick said that Schroders continued to prize its fund management business, despite the difficulties experienced in the sector this week by rival Morgan Grenfell.