By Scott Wright

INVESTMENT giant abrdn saw its share price close down nearly seven per cent last night after it fell short of profit forecasts and reported a rise in outflows from its funds in the first half of the year.

Edinburgh-based abrdn cited the “challenging global economic environment and market turbulence” as it recorded total net outflows of £35.9 billion in the first half, compared with £5.6bn in the opening six months of 2021.

And the company, which changed its name from Standard Life Aberdeen in 2021, warned that the current market uncertainty means that its “ambitions for revenue growth and improved cost/income ratio are likely to take longer than originally expected”.

Its cost to income ratio was higher at 83% in the first half, up from 79% at the same stage last year, which was attributed to lower revenue.

One analyst warned abrdn was in danger of dropping out the prestigious FTSE listing, with the company having seen its share price fall by around 30% since the start of the year.

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Assets under management narrowed to £508 billion from £542bn, which abrdn said reflected lower markets and the final Lloyds Banking Group tranche withdrawal of £24.4bn. The latter stemmed from the move by Lloyds to terminate the then Standard Life Aberdeen’s mandate to run the £109bn Scottish Widows asset management contract for the banking giant in early 2018.

The decision, which was sparked by the merger between Standard Life and Aberdeen Asset Management in 2017, led to a long-running dispute that ultimately resulted in Lloyds agreeing to pay SLA £140m in compensation. The settlement also included an agreement that £35bn of assets would remain under the management of SLA until at least April 2022.

The first-half outflows at abrdn were partially offset by the inclusion of assets following its acquisition of Manchester-based Interactive Investor, a subscription-based investing platform, for £1.5bn in December.

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Interactive, which offers services such as share dealing and portfolio management technology, had 408,000 customers by June 30 this year. Abrdn said yesterday that Interactive “continues to perform well against an uncertain market environment”, with adjusted operating profit up 47%, at £33m, in the first half compared with the 2021 run rate.

Chief executive Stephen Bird said: “The half-year group results largely reflect the challenging global economic environment and market turbulence. When I became CEO in late 2020 I said that we would pursue a strategy of diversification by refocusing our investments business into areas of strength, where we have scale and that lean into global growth trends and also significantly expand our reach into the higher growth UK wealth market.

“We are doing exactly that and the addition of Interactive Investor transforms our UK retail presence and future revenue streams. The strength of our balance sheet means that we can continue to invest and reward shareholders.”

Abrdn reported that fee-based revenue had dipped by 8% in the first half to £696m, while adjusted operating profit was 28% lower at £115m, “driven by market movements”. Analysts had reportedly pencilled in operating profits of £130m.

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A pre-tax loss of £320m was reported, following a profit before tax of £113m at the halfway stage last year. This was largely attributed by abrdn to losses of £313m from the change in fair value of “significant listed investments” over the period. The company booked net outflows of £3.8bn, compared with £1.9bn in the first half of 2021.

John Moore, senior investment manager at Brewin Dolphin, said: “Today’s mixed set of results from abrdn confirm the tricky position the company finds itself in.

“After a challenging year or so, between market turbulence and a restructuring of its business, abrdn finds itself at the edge of the FTSE 100 having lost around 30% of its value since the beginning of 2022.

“The purchase of Tritax and Interactive Investor have reshaped the company and appear to be performing well, but there are some more strategic moves required to get the fund manager back on track. Abrdn seems certain to be relegated from London’s top index unless it can pull something out of the bag in the near-term.”

The company declared an interim dividend of 7.3p per share, unchanged from last year. The period saw the initial phase of a £300m shareholder return programme begin with the launch of a £150m share buyback.

Shares in abrdn closed down 11.8p, or 6.8%, at 161.15p.