Action on Russia

Abrdn ‘making huge strides’ as revenue grows

Stephen Bird
Stephen Bird: huge strides

Wealth manager Abrdn has announced that it will not invest in Russia or Belarus “for the forseeable future”.

After posting an increase in annual revenue for the first time since the merger of Standard Life and Aberdeen Asset Management, the Edinburgh company said it had reduced its investments in the two countries amid reports that it was struggling to sell a stake in Rosneft.

In a media conference call, CEO Stephen Bird said it currently has £2 billion invested in the region, representing less than 2% of total assets.

The statement came as it posted a 6% rise in fee based revenue to £1.5bn and 47% rise in adjusted operating profit to £323m.

The company said it had seen strong growth across all three business streams. Profit before tax came in at £1.115bn against £838m last time. It proposes a full year dividend of 14.6p. The cost-income ratio has improved to 79% from 85%.

Assets under management and administration stood at £542bn, up 1% reflecting positive market movements, the impact of corporate actions and net flows.

Institutional and Wholesale net outflows (excluding liquidity) improved to (£2.1bn) from (£8.9bn) in 2020 largely due to lower net outflows in equities and net inflows in fixed income and real assets.

Mr Bird said: “For the first time since the merger, we have reported an increase in revenue for the full year – as well as an improved cost/income ratio of 79%, and a 47% increase in adjusted operating profit. We remain focused on delivering compound annual revenue growth in the high single figures. This will enable us to exit 2023 with a cost/ income ratio of around 70%.

“Strategically, we have made huge strides forward. We have simplified and extended the relationship with our largest client, Phoenix. We have successfully rebranded as abrdn which gives us a unified global identity and purpose. We have divested non-core assets and built out our capabilities across our three vectors, including in private markets and digital content.

“More broadly, we have sharpened the focus of our Investments business to identify the key areas where we have a true competitive advantage.

“And, late in the year, we announced our proposed acquisition of interactive investor – a transaction that transforms our Personal vector, diversifies group revenues and significantly expands our client reach. As stated when we announced, this acquisition is expected to be double-digit earnings accretive in the first full financial year following completion.

“Clearly, markets are volatile right now. Geopolitical risk and inflation are rising and there remains an element of uncertainty about the pace at which different economies are recovering from the impacts of the COVID-19 pandemic.

“We benefit from a strong capital position enabling us both to continue to invest in the business and return money to shareholders. This balance underpins our ability to create long-term value for shareholders.”

Market reaction

John Moore, senior investment manager at wealth manager Brewin Dolphin, said: “It has been a challenging few years for shareholders in Abrdn, but there are some indications in today’s results that the company is headed in a more positive direction.

“Assets under management and revenues are beginning to stabilise and Abrdn’s costs are improving – in addition, its investment in Tritax is beginning to bear fruit and the acquisition of Interactive Investor can help diversify the business.

“The situation in Ukraine will obviously affect Abrdn – not least with reports of the company struggling to sell a small stake in Rosneft – but there are tentative signs the management team’s strategy is beginning to yield results which, in turn, should help improve investor sentiment.”

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