Standard Life takes a hit but maintains bullish outlook

Published on Wednesday 5 August 2009 21:43

SAVERS cutting back on pension payments together with turmoil in the stock markets dented half-year figures at Standard Life.

UK new business sales were down 15 per cent to 1.53 billion, while the general turbulence on the markets impacted on the value of assets being transferred into its schemes.

But the company was confident enough about its trading position and its balance sheet to increase the interim dividend by 2 per cent to 4.15p per share.

A shift in product sales saw the number of customers opening tax-efficient self-invested personal pensions (Sipps) rise 13 per cent to 74,700, while its corporate pensions business performed well.

Tumbling stock markets eroded the group's capital buffer from 3.3bn to 3.1bn during the first half of the year.

Using the European Embedded Value accounting measure, underlying operating profits slid 35 per cent from 534 million to 348m.

Chief executive Sandy Crombie said: "The recession has had an inevitable impact on our performance.

However, today's results highlight Standard Life's robust business model and the ongoing resilience of our balance sheet."

Standard Life added that new business had also been hit by its decision not to renew lower-margin bulk sales of investment bonds to major institutional investors, which boosted sales last year.

"We deliberately let sales go in one product area which had low profitability," said Crombie.

Despite improvements in its Canadian business and further investment in its growing Asian arm, Standard Life said the economic outlook was "challenging".

But the group added that it had made 26m out of its planned 75m in cost-savings under a programme, which has cost 200 jobs so far.

The company has also outsourced elements of its IT work as well as automating customer services to save money.

Shares were flat as the figures underwhelmed the City. They closed at 192.1p, down 3.7p.

Panmure Gordon's Barrie Cornes said: "Standard Life has reported a mixed bag of results, not surprisingly impacted by the current investment markets and tough trading conditions."

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