The shares rose 80p to 1,170p on the news. Schroders doubled its dividend to 16.5p, which was still covered 6.6 times.
The bank revealed its inner reserves for the first time, at pounds 101.6m. It also broke down results between divisions and geographical areas.
George Mallinckrodt, chairman, said the results reflected not only favourable conditions for the industry but also the benefits of concentrating on fees and commissions, which increased by 42 per cent to pounds 302.2m.
In contrast, dealing income, which nearly doubled to pounds 61.5m, still only represented 13 per cent of overall income, he said. This compared with 25-30 per cent for most of Schroders' peers.
This made Schroders less vulnerable to a downturn in market activity. Meanwhile, interest income rose 11 per cent to pounds 90.1m. Funds under management grew by 47 per cent to pounds 52.9bn and profits from this source rose to pounds 56.8m, more than a quarter of total group profits.
The chairman said the fund management operation had made a big commitment to the equity side and to emerging markets, such as South- east Asia, Turkey and Poland.
Schroder Capital Management International was now the largest manager of foreign equities for US institutions, he added.
Corporate finance worldwide was involved in 115 transactions totalling pounds 15bn. In the US, Wertheim Schroder was involved in more than 40 financings worth a total dollars 6bn.
Mr Mallinckrodt said that Schroders was willing to increase its 50 per cent stake in Wertheim, this year if possible, but only on an agreed basis. 'There is every reason for the two firms to pull closer together,' he added.
Schroders' staff costs grew by 29 per cent to pounds 168.8m, including significant increases in bonuses to key staff. Shareholders' funds grew by 23 per cent to pounds 674.5m, or 523p a share, and return on equity was 31.6 per cent before tax.
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