Strong UK display leads to surge in Standard profits

The Edinburgh-based business, which has more than six million customers and is one of the UK’s biggest corporate pensions providers, reported a 15 per cent rise in operating profits before tax to £302m in the first six months of the year.

The UK saw a 62 per cent leap in profits to £141m, driven by the popularity of its DIY-style self-invested personal pension (SIPP) products, which increased customer numbers by 22 per cent to 147,000 in the period.

The company also said new changes to financial advice regulation – known as the Retail Distribution Review – had allowed it to increase its market share without incurring the cost of commission on new business with independent financial advisers.

The group’s Canadian arm held back a stronger performance after interim profits at the division fell 30 per cent to £72m due to the country’s low interest rate environment.

Standard Life shares rose after yesterday’s results.

The stock has made steady gains in the past year amid expectations it will gain from the UK’s rising life expectancy and Government changes to increase the proportion of the population saving for retirement.

Last year, 17 per cent of the population were aged 65 and over and this is expected to increase to 23 per cent by 2033.

Standard Life said assets under administration in the UK fees business rose four per cent to £104.3bn, while business net inflows of £900m were flat on the same period last year.

David Nish, the chief executive, said: “These results show Standard Life is performing well.”

He added: “The industry is undergoing a period of significant change and we believe that this brings opportunity.

“We are well prepared for the regulatory and market changes on the horizon, and have invested to make sure we are even better placed to meet the needs of our customers and their advi- sers.”

Its international division saw a 47 per cent surge in operating profits before tax to £28m, including a strong performance from its China and India arm.

“The benefits of the cost reduction programme are coming through to a much greater extent than we and the market had anticipated,” Panmure Gordon analyst Barrie Cornes wrote in a note, upgrading his recommendation on the shares to ‘buy’ from ‘hold’.

Standard Life wrong-footed some analysts because a programme of technology investment had delivered bigger-than-expected cost cuts.

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