PRUDENTIAL will be under pressure to maintain its rate of dividend growth next week as chief executive Tidjane Thiam tries to recover from the insurer’s failed bid for AIA.
Investors will be looking for at least five per cent growth in the interim payout, in line with the past three years, to 6.6p. The number will be under particular scrutiny as Prudential’s management squandered £450m – almost equal to 2009’s full-year dividend – on advisory fees for the aborted $35.5bn (£22.6bn) takeover of AIG’s Asian arm in June.
Prudential’s six-month results on 12 August represent an opportunity for Thiam and chairman Harvey McGrath to prove their worth at the helm of the FTSE 100 company. Both men have faced calls for their resignation in the wake of the AIA debacle. A recent trading update showed a 27 per cent uplift in group sales to £1.4bn for the five months to May.
The board will also face questions about Prudential’s long-term structure. Stockbrokers have price targets on Prudential shares ranging from 700p to more than 800p, against Friday’s closing price of 554.5p.
Analysts say Prudential needs to spur a re-rating of the shares by unlocking value from its operations. One route mooted by Panmure Gordon would be to list Prudential’s Far Eastern limb at around £12.6bn. The move would double Prudential’s market capitalisation overnight.
Prudential declined to comment.