Friday 19 February 2016 7:28 am

Standard Life’s share price lifts as group raises dividends by 7.8p saying it is “well capitalised” under Solvency II

Catherine Neilan is head of politics and investigations at City A.M.

Catherine Neilan is head of politics and investigations at City A.M.

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Standard Life has upped its dividend after group inflows soared, boosting income and profits ahead of expectations, and showing a strong surplus under new Solvency II rules. 

The figures

Group operating profit before tax at the 200-year-old investment bank and insurer rose nine per cent to £665m for the full calendar year, while group underlying performance was up 12 per cent to £630m. Analysts at UBS had forecast it would come in at £613m.

Group fee based revenue climbed to £1.58bn, up from £1.43bn last year. 

Assets under administration climbed four per cent to £307.4bn despite volatile markets, driven by net inflows of £6.3bn, compared with just £1bn last year. More than two thirds (67 per cent) of net inflows came from outside the UK as Standard Life made progress on its global expansion.

The business said it was "well capitalised under Solvency II", with a stable surplus of £2.1bn and a solvency ratio of 162 per cent. 

As a a result, the business is recommending a final dividend of 12.34p per share, making a total of 18.36p – up 7.8 per cent on 2014. 

Standard Life's share price rose 2.8 per cent in early trading.

Why it's interesting

The financial company appears to be weathering the global market turmoil well, although Standard Life Investment's European pensions and savings arm did drop off, drop £39m to £31m. 

The level of capital surplus at the group should be reassuring given the recent implementation of Solvency II against a backdrop of falling equities. The dividend growth likewise should please investors. 

What Standard Life said

Chief executive Keith Skeoch said: "During 2015 Standard Life has made considerable progress towards creating a world-class investment company against a backdrop of volatile investment markets and an evolving regulatory landscape.

"We have increased the assets that we administer on behalf of our clients and customers to £307bn with almost two thirds of these assets now coming from our growth channels. Investments are at the heart of what we do and we now manage £253bn of assets across the globe driven by strong investment performance. We continue to see the benefits of our expanding distribution capabilities and strategic relationships with 67 per cent of net inflows of £12.6bn into our institutional and wholesale growth channels coming from outside of the UK.

"We also continue to build momentum in pensions and savings across our workplace and retail channels. Regular contributions into our workplace pensions continue to grow strongly while our wrap platform attracted record net inflows and continues to lead in the advised platform market.

"While the difficult conditions in global financial markets may persist for some time, Standard Life remains well positioned to meet the needs of clients and customers around the world. The breadth of our investment propositions, underpinned by strong investment performance and innovation, combined with our strength in pensions and savings, the power of a trusted brand and a strong balance sheet, means that we have a well-diversified and resilient business that continues to deliver for customers and clients as well as shareholders."