Banking

Growth ambitions delayed as abrdn profits drop and AUM shrinks

According to the firm’s half-year results, adjusted operating profit has dropped 28% compared to the same period last year, down to £115m, while IFRS before tax has tumbled from a profit of £113m to a loss of £320m.

Profits in the firm’s investment arm fell even more sharply, down 40% on H1 2021’s figure to £76m. Assets under management shrunk 17% in this arm, down to £386bn, with gross redemptions of £62.7bn taking its toll.

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Net flows across investments came in at a £37.3bn reduction, although when clients transferring assets to cash balances and the final tranche of Lloyds Banking Group withdrawals are excluded, this falls to £5.2bn.

Total assets under management and administration across the group, which includes assets acquired as part of the firm’s purchase of interactive investor, also fell from £542bn to £508bn, a reduction of 6%.

Fee based revenue dropped 8% to £696m but abrdn announced an interim dividend of 7.3 pence and commenced its £300m buyback programme with an initial £150m phase.

Cost-saving measures will see the firm trim £150m over the period to 2024 from its investment arm, although specific details were not laid out.

Bright spots included platform interactive investor, which recorded net inflows despite ongoing market conditions, although this had shrunk slightly from £3.6bn in H1 2021 to £2.2bn, and increased customer numbers to roughly 408,000.

Tritax Big Box AUM increased 31% to £7.7bn over the past year and maintains a strong real estate pipeline.

Investment performance across the group was largely down for the year, with only 30% of equities AUM performing ahead of benchmark, rising to 51% over three years and tumbling back to 34% over five years.

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Fixed income, multi-asset and quantitative all came in under company par, while its alternatives arm offered investors stellar performance.

Over one year, 97% of alternatives AUM outperformed benchmark, rising to 100% over three and five years.

Over a one-year period, 53% of total abrdn AUM outperformed benchmark, rising to 63% over three years and 61% over five.

abrdn’s share price has fallen 5.75% since the bell.

Stephen Bird, abrdn chief executive, said: “The half year group results largely reflect the challenging global economic environment and market turbulence.

“When I became CEO in late 2020, I said that we would pursue a strategy of diversification by refocusing our investments business in to areas of strength, where we have scale and that lean into global growth trends and also significantly expand our reach into the higher growth UK wealth market.

“We are doing exactly that and the addition of interactive investor transforms our UK retail presence and future revenue streams. The strength of our balance sheet means that we can continue to invest and reward shareholders.”

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