Standard Life Aberdeen has warned over a “turbulent” 2020 as it posted a 10% drop in annual profits after customers continued to pull out cash.
It reported underlying pre-tax profits of £584 million, down from £650 million in 2018, as fee-based revenues fell 13% after two years of fund outflows.
Standard Life Aberdeen (SLA) – Britain’s biggest listed asset manager – suffered net outflows of £58.4 billion, including £41 billion lost due to Lloyds Banking Group’s decision to end its mammoth contract with the group.
Even with this stripped out, SLA still saw £17.4 billion of investor cash walk out the door, though this was a big improvement on the £40.9 billion seen in 2018.
The group said the outflows “continued reflecting investor sentiment towards emerging markets and equity markets more generally”.
On a statutory basis, SLA swung to a £243 million pre-tax profit from losses of £787 million in 2018.
The group said the outlook was set to be volatile, given the coronavirus outbreak and equity market turmoil.
Keith Skeoch, chief executive of SLA, said: “The outlook for the markets and our industry in 2020 is turbulent with the additional complexity of Covid-19.
“Importantly we are focused on what we can control, namely delivering for our clients, customers, colleagues and shareholders; diversifying our revenues; investing for the future and maintaining financial discipline.”
Shares lifted 2%, amid a wider bounce back in the London market after Monday’s heavy falls, with the underlying profit result also beating expectations.
Results showed its assets under management and administration fell 1% to £544.6 billion, but lifted 6% with the hit from the Lloyds contract loss stripped out.
Lloyds was forced to pay £140 million to SLA to settle a row over its acrimonious split from the firm.
In March last year, a tribunal ruled Lloyds did not have the right to end its giant £100 billion contract with SLA.
SLA has also retained £35 billion of Lloyds assets following its dispute with the bank.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said while the results show an improving performance at SLA, the recent market chaos threatens to throw its turnaround off course.
He said: “A collapse in equity markets worldwide will do little for the group’s fee income, and a specialism in emerging markets means SLA could be hit particularly hard if investors become more risk averse.”
“Management’s warning of turbulent times ahead could prove something of an understatement,” he added.