Standard Life shares rise despite 7% sales decline

Business Correspondent/Personal Finance Editor

Thursday 1 November 2012

Standard Life shares regained four-year highs yesterday as the Edinburgh giant shrugged off a 7% dip in sales and stressed a 3.8% growth in assets in the third quarter and a strengthened balance sheet.

IMPROVEMENT: Chief executive David Nish says Standard Life is in a healthy position to meet demand for investment solutions.

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SIMON BAIN

Performance was driven by Standard Life Investments, which added £4.5 billion of third party assets including £2.6bn of net inflows (as opposed to market movement), and by Standard's higher-margin wealth business which it says is the fastest-growing in the industry.

Group assets under administration rose by £7.7bn in the quarter and are up by £13.5bn in the year to date, including £3bn of net inflows. Both assets and flows were above City expectations. Sales of long-term savings products fell from £15.5bn to £14.4bn, which Standard said was due to wider market factors including corporate pensions uncertainty which saw sales down 32% to £2.6bn. The group's IGD surplus, the key measure of capital strength, increased from £3bn to £3.4bn The shares closed up 2.4% at 292.5p, just below a four-year high hit a fortnight ago.Commenting on the headline fall in sales, Jackie Hunt, finance director, told The Herald: "We are now a traditional asset-gatherer as opposed to an insurance company, and 75% of our business is fee-based and related to assets under administration." The key metrics were the net inflows of business, and the margins being earned, she added. "This is how we manage our business and how we incentivise."Ms Hunt said snapshot sales figures were still compared by industry analysts and presented prominently by more traditional rivals, but if there were constant outflows "you are just selling only to lose it a week or a month or a year later".The group reported total net flows of £2.1bn into its higher margin MyFolio and other investment solutions "against a backdrop of subdued consumer sentiment, ongoing economic uncertainty, and increased commission-based competition ahead of the retail distribution review (RDR)".It said: "Standard Life Wealth is the fastest growing provider of discretionary investment management services in the UK as it continues to build a strong presence in the IFA market. Net flows into Standard Life Wealth's higher margin - propositions increased by 95% to £572 million while assets doubled to £1.6bn." Self-invested personal pension customers were up by 20% with assets up 19% to £19bn. David Nish, chief executive, said Standard had performed well so far, and was poised to exploit the new post-RDR world where fees would replace commissions. He said: "By combining our platform technology with investment expertise and high levels of customer service, we are in a unique position to meet the broadening demand for investment solutions from customers, advisers and financial institutions."He said Standard had continued to expand a fee-based offering in Canada and had opened for business in Singapore. "Uncertainty around the future of the eurozone and difficult economic conditions continue to impact consumer sentiment. However, we are confident the ongoing focus on increasing assets and improving the efficiency and scalability of our business will continue to drive improved returns."

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Standard Life shares rise despite 7% sales decline

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