Insurance and asset manager Standard Life has posted a 6% jump in first half profits ahead of its imminent £11 billion (€12 billion) merger with Aberdeen Asset Management.
Operating pre-tax profits were £362 million, slightly higher than analysts had expected, and were delivered in spite of investors pulling out £3.7 billion in the six months to June 30.
The Edinburgh-based firm’s flagship £44 billion Global Asset Return Strategies (GARS) multi-asset fund range saw net outflows of £5.6 billion while total assets under administration rose 1% on a year ago to £362 billion.
Along with many active fund managers, Standard Life and Aberdeen have been struggling in recent years to stem flows from their funds as investors are lured by cheaper low-cost passive funds.
The case for the merger, which follows a wave of consolidation in the active sector, is largely built on the potential to cut costs to make the enlarged firm be able to compete with index funds and to deal with the increased cost of tougher regulations.
The deal, announced in March, is expected to lead to cost savings of £200 million a year with around 800 jobs expected to be cut over a three-year period from a global combined workforce of 9,000.
Chief executive Keith Skeoch said that the firm had delivered a “strong performance” in the first half with fee-based revenue up 5%.
“We are ready to accelerate the pace of strategic delivery as we open the next chapter of our transformation to a diversified world-class investment company,” he said.
The dividend was increased by 8.2% to 7p a share. Shares in the firm fell more than 1% following the results.
The enlarged firm, to be called Standard Life Aberdeen, will be headquartered in Edinburgh and jointly run by Skeoch and Aberdeen boss Martin Gilbert.
The decision to appoint two co-chief executives has been greeted with some scepticism by many in the industry.
The merger – which will create Europe’s second largest fund manager with £670 billion under management – is expected to complete on Monday, after being signed off by shareholders in June.
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