M&G beats estimates for 1H profits and net client flows

20th Sep 2023 07:07

(Sharecast News) - Global investment manager M&G posted stronger-than-expected interim profits and net client flows.

"Against the backdrop of ongoing market volatility and uncertainty we have made progress against all three pillars of the strategy that we launched in March - maintaining our financial strength through capital discipline; mobilising the Transformation programme to simplify our business and improve client outcomes; and delivering growth with positive net client inflows," said chief executive officer Andrea Rossi.

"[...] We are, however, not complacent and will continue to focus on ensuring that our balance sheet remains strong and we deliver on our purpose and strategic objectives."

Pretax profits came in at £75m with adjusted operating profits printing at £390m (consensus: £284m) or up by nearly 31% in comparison to the year earlier period.

Client net inflows for the half, excluding Heritage, reached £700m (consensus: -£2.2bn), although assets under management and administration came in at £332.8bn (consensus: £339bn).

Operating capital generation of £505m also beat analysts' estimates for £328m.

On the outlook, the firm said that it was on track to meet its 2024 operating capital generation target of £2.5bn and that it was making good progress on its 2025 financial targets.

As well, the 6.5p interim dividend per share declared by management was in line with analysts' estimates.

"Choppy markets are never an easy thing to navigate as an Asset Manager, made even more difficult when the government steps in and makes things worse - M&G's still feeling the effects of the failed UK mini-budget as redemptions from institutional clients in the UK impacted results," said Matt Britzman, equity analyst at Hargreaves Lansdown.

Nevertheless, Britzman noted how the slack was picked up by other business units, notably annuities on the back of higher rates and thus profitability.

The analyst also how M&G had inked to bulk annuity deals after period close - the first business in this area since it closed its annuity book in 2016.

That he said would provide another string to M&G's bow.

As of 1006 BST, shares of M&G were trading up by 2.51% at 204.40p.