Standard Life Aberdeen's Skeoch 'sad and excited' after bowing out with 'resilient' H1 figures

Keith Skeoch will bow out as Standard Life Aberdeen (SLA) chief executive having delivered “resilient” first-half results including maintaining the interim shareholder dividend despite the impact of the Covid-19 crisis.

Keith Skeoch is set to bow out as chief executive of Edinburgh-headquartered fund management giant Standard Life Aberdeen. Picture: Graham Flack

The Edinburgh-based financial heavyweight recently announced that Skeoch – one of the key figures behind the £11 billion merger of Standard Life and Aberdeen Asset Management in 2017 – will be replaced by Stephen Bird, a former executive at US-headquartered banking giant Citigroup.

The shake-up at the top follows the appointment of Sir Douglas Flint as chairman of SLA at the start of last year.

The firm had been running with an unusual co-chief executive structure that had been shared between Skeoch and Martin Gilbert following the 2017 tie-up. Gilbert stepped down from his co-chief executive role last year and will leave SLA’s board in September.

Releasing first-half results showing a 30 per cent fall in profits, Skeoch told investors: “Despite exceptional circumstances we have delivered a resilient performance.

“Our foundations are firm, we have a strong balance sheet which enables us to both invest in our business and maintain our interim dividend of 7.3p.

“This is my last set of results as chief executive of Standard Life Aberdeen, following 21 years with the business – a period where I have seen the business evolve from a mutual life and pensions company to a capital-light global investment house.

“I am pleased to hand over a business with strong foundations, an enviable capital position, talented people, enduring relationships and big ambitions.”

He told The Scotsman: “I’m sad that I won’t have as much contact on a day-to-day basis with the people that I like and admire but I am also excited that the firm has asked me to stay on as chairman of the research institute.”

The group reported an adjusted profit before tax of £195 million for the first half of 2020, slightly above analysts’ expectations but down on the £280m posted for the same period last year.

The figure was impacted by outflows relating to a major Lloyds Banking Group mandate and the market turmoil triggered by the pandemic.

Alasdair Ronald of Brewin Dolphin noted: “Although the results were slightly better than anticipated by some analysts, the declines of 13 per cent in fee-based revenue and 30 per cent in adjusted pre-tax profits indicate only too clearly the impact of last year’s significant funds outflow.

“Last year, the group appointed a new chairman and a new CFO and soon the current CEO will step down to be replaced by Stephen Bird.

“The new management team may elect for some form of ‘kitchen sinking’ exercise to give them a fresh start and separation from the sins of yore. The sustainability of the dividend remains a concern as it is not covered by operating cash flow.”

Assets under management and administration fell to £511.8bn after the Lloyds Banking Group tranche withdrawals, compared with £544.6bn in 2019.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “At first glance these results look like standard fare from SLA, with AUM falling on significant outflows and revenues and profits lower as a result. However, there are signs of some promising progress under the surface.

“Lower revenue reflects historic outflows and a shift towards lower margin, and lower risk, money market funds by clients – and there’s really not much SLA can do about either. However, the crucial equity funds have seen investment performance improve substantially, and while there’s still work to be done, if performance can be maintained that should drive future inflows.

“In fact strip out the decision by Lloyds to shift its assets to its Schroders joint venture and asset flows have already crept into positive territory – driven by inflows from retail investors. Cost savings from the merger of Standard Life and Aberdeen Asset Management are still ticking up, and together with efficiencies elsewhere in the business that sets the group up well if it can get money through the door again.

“Longer term SLA still has to contend with the rise of passive investment alternatives. However, a better investment performance, good retail distribution platforms and lower operating costs give it all the tools it needs to make the most of its situation.”

Earlier this week, it was reported that Skeoch was to take on the interim chairman role at the Financial Reporting Council. Since May, he has also chaired the Investment Association lobby group.

A message from the Editor:

Thank you for reading this story on our website. While I have your attention, I also have an important request to make of you.

The dramatic events of 2020 are having a major impact on many of our advertisers - and consequently the revenue we receive. We are now more reliant than ever on you taking out a digital subscription to support our journalism.

Subscribe to scotsman.com and enjoy unlimited access to Scottish news and information online and on our app. Visit https://www.scotsman.com/subscriptions now to sign up.

By supporting us, we are able to support you in providing trusted, fact-checked content for this website.

Joy Yates

Editorial Director