Standard Life profits soar 15 per cent in six months

The Edinburgh-based business, which has more than six million customers and is one of the UK’s biggest corporate pensions providers, reported a 15 per cent rise in operating profits before tax to £302 million in the first six months of the year.

The UK saw a 62 per cent leap in profits to £141m, driven by the popularity of its DIY-style self-invested personal pension (SIPP) products, which increased customer numbers by 22 per cent to 147,000 in the period.

The company also said new changes to financial advice regulation – known as the Retail Distribution Review – had allowed it to increase its market share without incurring the cost of commission on new business with independent financial advisers.

The group’s Canadian arm held back a stronger performance after interim profits at the division fell 30 per cent to £72m due to the country’s low interest rate environment.

Despite warning of a “period of significant change”, the company expects the UK market – its biggest – to continue to thrive, while a change of chief executive in the Canadian arm is expected to produce better results.

The group operating profits before tax rose to £302m in the six months to June 30 from £262m in the same period last year. Assets under administration climbed to £204.2 billion from £198.4bn in 2011.

Chief executive David Nish said: “These results show that Standard Life is performing well. We have delivered increased profits, cash flow and dividends and we are achieving ongoing improvements in operational and financial  performance.

“The UK results, where profits benefited from higher income and significantly lower costs, demonstrate the strength and scalability of our propositions and our brand.”

Revenues from the fee business increased to £620m and now make up 78 per cent of total income. Acquisition expenses – the costs Standard Life incurs in writing new business – have fallen 18 per cent to £144m, largely as a result of cuts in the UK.

In the UK, profits rose to £141m in the first half from £87m in 2011. The 30 per cent drop in profits in Canada was blamed on the timing of a restructuring and low interest rates.

“The industry is undergoing a period of significant change and we believe that this brings opportunity,” Mr Nish said.

“We are well prepared for the regulatory and market changes on the horizon, and have invested to make sure we are even better placed to meet the needs of our customers and their advisers.”

Standard Life will pay an interim dividend of 4.9p per share, an increase of 6.5 per cent on 2011, on November 14. Shares rose 3.5 per cent to 265.8p in early trading.