Exceptional charges of £167.4m hit the firm from unrealised writedowns and realised losses on group investment capital.
Redundancy costs and the knock on effect from acquisitions in asset management and private banking operations also hampered performance.
Investor withdrawals also dented profit before tax (and exceptional items) in these operations which fell to £289.5m from £307.8m over the same period.
Funds under management for the group also fell to £110.2m from £139.1 the previous year.
Schroders saw heavy outflows of £6.2bn from retail investors in its asset management operations in 2008. This was particularly strong in the second half as global investors retreated more widely from equity funds.
Final dividend will remain at 21p, taking the total dividend for 2008 to 31p up 1p on the previous year.
The firm said it expects the very challenging environment to persist throughout 2009. It says: “The impact on revenues of lower levels of assets under management will be partially offset by lower compensation and other costs. However, whilst we are actively managing our cost base, we will not take actions which could damage our franchise or limit growth opportunities when markets recover.”