SLA kicks off share buyback as profit jumps in first half

● But group also warns of ‘challenging’ backdrop for asset management sector

Standard Life Aberdeen has pushed the button on plans to return some £1.75 billion to shareholders, with the first tranche of its share buyback programme kicking off “in the next few days”.

The Edinburgh-based financial giant, which was formed out of the £11bn merger of Standard Life and Aberdeen Asset Management last year, first outlined the buyback scheme in May, saying it would follow the sale of its European insurance business to Phoenix Group.

Unveiling first-half results yesterday, the group confirmed that it would start the first £175 million tranche of its buyback programme shortly, and that the sale to Phoenix would be completed in the third quarter.

The firm reported £16.6bn in outflows for the first half of the year. Its assets under management totalled £610.1bn, compared with £626.5bn for the same period in 2017. Gross inflows were £38bn, down from £39.5bn a year earlier.

Joint chief executives Martin Gilbert and Keith Skeoch described conditions for the asset management industry as “challenging”.

They told investors: “Our gross inflows remain robust and are spread across a diverse range of investment capabilities, and our market-leading adviser platforms continue to grow.

“Our investment and distribution teams are winning new mandates and we have a good and diverse pipeline of business from around the world.

“We are actively taking steps to improve our investment performance in key areas and are encouraged by the impact of these initiatives.

“We are also pleased by progress on the integration programme and achievement of cost synergies. The sale of our UK and European insurance operations will complete our transformation to a capital light business and enhances our strategic partnership with Phoenix.

“Our financial strength allows us to return up to £1.75bn of capital to shareholders and we will commence the first tranche of £175m in the next few days.”

IFRS pre-tax profit for the period was £127m, up from £94m. The group plans to pay an interim dividend of 7.3p, a rise of 4.3 per cent.

John Moore, senior investment manager at Brewin Dolphin Edinburgh, said: “These results from Standard Life Aberdeen demonstrate that it’s a business in transition – total assets under management are down to £610.1bn, net inflows remain a challenge, but costs savings of £350m have been identified and profitability is strong.

“It has gone through a great deal of change in the past year with the sale of its insurance arm to Phoenix, the floating of HDFC Asset Management in India, and the departure of some of its senior team in order to build a foundation for future growth.

“Overall, it’s another mixed bag for [the group], but the share price discounts much of the bad news and could continue to recover.”