Sales down but Standard Life 'resilient' in face of economic gloom

Published on Thursday 30 October 2008 08:50

LIFE and pensions giant Standard Life said today that it is continuing to perform "resiliently" despite the growing economic gloom and fears of recession.

The Edinburgh-based firm announced its latest figures for the year up to the end of the third quarter. Although there were signs that the economic environment had impacted its performance, it did not suffer as much as some of its rivals.

In the nine months to the end of September, UK life and pensions sales dropped five per cent to 9.8 billion.

The decline accelerated in the third quarter as the financial downturn intensified, with sales down 14 per cent at 2.6bn.

Analysts have forecast that cash-strapped consumers will spend less on pensions.

But David Nish, Standard Life's finance director, insisted today that he remained confident about the outlook for life and pension sales. He said: "What you see is that customers are choosing less-risky investment areas. They are not going for equity products and are instead going for cash.

"One of the things that does happen when times are hard is that people begin to focus that bit more on savings and we have found that in some cases people's savings actually go up."

The update revealed that, despite the difficult market conditions, Standard Life's capitalisation position has held up well.

At the end of September, it had 3.4bn of "directive surplus" – or cash in the bank – only down slightly on 3.5bn at the end of March.

The company also said that Standard Life Bank had seen the value of mortgages under its management only decline slightly, from 10.6bn in March to 10.1bn.

The mortgage arrears rate – customers who have missed payments for three consecutive months – increased by 0.6 per cent to 0.3 per cent but is still a fifth of the Council of Mortgage Lenders' average.

Mr Nish said that the better rate is as a result of its focus on the professional market. He said:

"We have the best quality mortgage book in the UK. We don't want defaults and we don't want our customers to default . That is why we have always encouraged lower loans-to-value."

Chief executive Sandy Crombie said: "While markets are volatile and may remain that way for some time, we are well positioned to continue to attract institutional and retail assets."

Early morning trading suggested investors had been soothed by the results. In the first quarter hour, SL's share price increased by four per cent to 208p.

ONLY TWO FROM HBoS TO MAKE TOP TEAM

ONLY two HBoS executives are included in the proposed executive management team for the new merged bank named today by Lloyds TSB.

Sir Victor Blank will be chairman and Eric Daniels chief executive of the enlarged group. Lloyds TSB personnel will fill seven of the other nine posts. The only HBoS staff in the top team will be Harry Baines, as general counsel and company secretary, and Jo Dawson, director of a new wealth and international division.

Today's announcement came as MSPs debated Liberal Democrat calls for HBoS to remain an independent bank.