Standard Life Aberdeen cuts dividend, M&G raises it
Standard Life Aberdeen and M&G today sent investors in opposite directions as one cut its dividend and the other raised it.
Standard Life, currently in the process of being turned around by former Citigroup banker Stephen Bird, “rebased” its dividend down by a third but M&G defied fears that it would do the same, actually increasing its payment.
M&G, which went through its first year since splitting off from parent company Prudential, said it was able to increase its divi because it had generated some £1 billion in 2020 - way in excess of City hopes.
Chief executive John Foley was rewarded with a 5% leap in the share price, while Standard Life fell 1%.
M&G profits were down largely due to its new independent status meaning it had to shoulder its own corporate costs.
Foley said: “When you consider we were only five months old [going into the pandemic] we feel these results are pretty strong.”
He said the group had picked up new fund management mandates from institutions and said its takeover of the Ascentic IFA platform from Royal London would help it distribute more of its funds through advisers.
Fund managers suffered net outflows from retail investors spooked by the Covid crisis, and Standard Life Aberdeen also reported lower profits today. Bird said, however, that growth would return after he outlined a new strategy for the business, including rebasing the dividend which had been uncovered for a long time under previous management.
Standard Life Aberdeen’s adjusted pre-tax profits were £487 million for 2020, down nearly 17% on the previous year. M&G’s were £788 million against £1.15 billion the year earlier.
Despite Standard’s share price fall, analysts at Jefferies investment bank said the profits were better than expected and retained the stock at a Buy, praising future savings and big capital resources.
Fund managers have been lukewarm on the prospect of Lord Hill’s reforms to the stock market rules which would relax rules on technology company chiefs wanting to retain extra voting control over their shares. Big investors fear they could bring badly run companies to the London Stock Exchange.
Foley said he gave the reforms “a cautious welcome” and said he would await the outcome of more detailed government proposals. “We know dual class shares can work but you really need to think through the detail of these proposals really carefully. I know that sounds boring but they will impact the market for a very long time.”
He remained upbeat about Britain’s future after Brexit but said: “It would be good if we could have an answer on where financial services stand.”
The UK government is currently negotiating on a memorandum of understanding with the EU after financial services were not included in the original Brexit trade deal.
Standard Life Aberdeen shares fell 2.6p to 316.35p while M&G surged 10.3p to 215.45p.
