(Alliance News) - M&G PLC on Wednesday reported consensus-topping half-year profit, and it said net client inflows remained "positive" despite redemption pressure in the wake of the UK government's mini-budget crisis a year ago.
M&G shares rose 4.1% to 207.50 pence each in London on Wednesday morning.
Excluding its Heritage business, M&G said its net client flows in the first half ended June 30 totalled GBP700 million. Though slowing from GBP1.2 billion a year prior, M&G said "net flows remain positive into a third consecutive year". The Heritage arm includes corporate pensions, annuities, life, savings and investment products.
The positive net flows came despite "known headwinds from UK institutional clients". M&G said its Institutional Asset Management business suffered net client outflows of GBP1.4 billion in the first half, a markedly worse outcome than the GBP300 million in inflows a year prior.
M&G explained this was "driven by the exceptional and expected redemptions from UK clients triggered by the mini-budget crisis". The mini-budget, unveiled by former UK chancellor Kwasi Kwarteng, spooked markets and led to his resignation last year. The financial turmoil also forced Liz Truss to step down as prime minister after a short stint at Number 10.
"Despite these known headwinds in the UK, we have continued to expand our presence in Europe, winning large mandates in the Netherlands and Switzerland," M&G said.
M&G swung to a pretax profit of GBP128 million from a loss of GBP1.8 billion a year earlier. Adjusted operating profit rose 31% on-year to GBP390 million from GBP298 million, topping consensus of GBP284 million.
Assets under management and administration fell short of consensus, however, declining 4.6% year-on-year to GBP332.8 billion from GBP348.9 billion. They had been expected to total GBP339 billion.
Negative market movements of GBP6.7 billion, as well as net client outflows of GBP3.2 billion from its Heritage arm, hurt M&G's assets under management and administration outcome.
M&G reported insurance revenue of GBP1.82 billion, rising 1.8% on-year from GBP1.78 billion.
"Today's results demonstrate the underlying strength of our business model, the resilience of our balance sheet, the attractiveness of our propositions as well as the hard work and commitment of our colleagues to deliver for our clients and execute on our strategic ambitions," Chief Executive Andrea Rossi said.
M&G lifted its interim dividend by 4.8% to 6.5 pence per share from 6.2p.
The company added: "M&G is well positioned to navigate the current uncertain economic climate due to its diversified business model, international footprint, compelling products and services, investment capabilities and expertise. Our results for the first half of 2023 underpin our confidence in the delivery of our core priorities and financial targets.
"We continue to focus on our programme of business simplification and transformation, aligned to client-driven values, which will unlock growth and enable us to invest selectively focusing our disciplined approach to capital allocation. We remain on track to achieve our operating capital generation target of GBP2.5 billion by end 2024, and we are making good progress on our 2025 financial targets."
Its 2025 targets also include generating GBP200 million worth of cost savings, gross of inflation. M&G expects to achieve GBP50 million of these savings by the end of 2023.
By Eric Cunha, Alliance News news editor
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