Abrdn profits rise hint at asset manager’s recovery as outflows slow

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Standard Life Aberdeen PLC updates

Abrdn, the UK asset manager formerly known as Standard Life Aberdeen, has reported improving interim results following a slowdown in client withdrawals in the first half of the year.

The Edinburgh-based group said the figures, the first since its April rebranding, showed that the three-year recovery plan devised by chief executive Stephen Bird was making progress towards meeting its financial targets.

Stronger-than-expected performance fees also contributed to a jump in profits at the UK’s second-largest fund manager. Abrdn reported a 77.2 per cent rise in adjusted pre-tax profit to £163m for the first six months of 2021 compared with the same period last year, after fee-based revenue rose 7 per cent to £755m. The group reported pre-tax profits on an IFRS basis of £113m, compared with a loss of £498m in the first half of last year.

Performance fees rose to £22m, almost double the £12m recorded in the same period a year ago.

Adjusted diluted earnings per share, Abrdn’s preferred EPS measure, jumped to 7p in the period, more than double the 3.3p reported in the first half of 2020 and ahead of the consensus forecast by City analysts.

Net withdrawals by clients slowed to £8.3bn in the first six months compared with £26.8bn in the same period a year ago. Outflows over the past two years have been swollen by the withdrawal of money which Abrdn previously ran for Lloyds Banking Group, after their partnership ended in 2018. Excluding the impact of this, and withdrawals from liquidity funds which are more volatile, net outflows shrank to £1.9bn compared with £6.8bn in the first six months of 2020.

Assets under management and administration were £532bn at the end of June, down 1 per cent on £535bn at the end of December.

Bird said that Abrdn had made “good progress” in simplifying and focusing its business since his appointment as chief almost a year ago, adding that the group had the financial firepower to grow as its surplus regulatory capital position stood at £2.8bn at the end of June.

Abrdn also announced that it had bought a Exo Investing, an artificial intelligence fintech, for an undisclosed sum, a deal Bird said would help it offer new digital wealth management capabilities via an app to clients.

“Our ambition is to be the company individuals turn to when developing their savings and investment goals,” said Bird.

Tom Mills, an analyst at Jefferies, said there were notable “bright spots” for new business in Abrdn’s adviser and personal investment arms, which together attracted net inflows of £2.5bn, and also for private equity and credit where it reported net inflows of £1.5bn in the first half.

Abrdn’s shares fell 1.8 per cent by mid-morning in London trading.

Rhea Shah, an analyst at Deutsche Bank, said that she expected investor sentiment to improve as Abrdn had taken a “step in the right direction” towards achieving its financial targets with its better-than-expected earnings performance and strengthened capital position.

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