Abrdn has reported an increase in fee-based revenue for the first time since the merger of Aberdeen Asset Management and Standard Life in 2017.
As part of its full year results, published this morning (March 1), the fund house formerly known as Standard Life Aberdeen posted a six per cent rise in fee-based revenue to £1.5bn in 2021.
This drove adjusted operating profit up 47 per cent to £323mn, compared with 2020, and pre-tax profit rose 33 per cent to £1.1bn.
The group’s cost to income ratio dropped from six percentage points to 79 per cent, and earnings per share rose to 46p.
While the company did not see net inflows, net redemptions slowed from £29bn in 2020 to £6.2bn in 2021.
Assets under management nudged up 1 per cent to £542bn.
Stephen Bird, chief executive officer of Abrdn, said 2021 was the group’s “reset year”.
“In 2021 we set out a clear strategy for how we will create long-term sustainable growth and arrest the decline in revenue," he said.
Bird said the firm has made “huge strides forward” by simplifying and extending its relationship with its largest client, Phoenix, successfully rebranding, and divesting non-core assets.
“More broadly, we have sharpened the focus of our investments business to identify the key areas where we have a true competitive advantage.”
The results do not include the acquisition of Interactive Investor, which was announced in December.
Bird said the £1.5bn acquisition will be transformational, diversifying group revenue and “significantly” expanding 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,” he said.
Speaking about the impact of economic sanctions on Russia after its invasion of Ukraine, Bird said the firm has less than half a per cent of client money invested in Russia.
“We haven’t as yet needed to suspend any funds either because the exposure to Russia, Ukraine and Belarus is a limited component of the funds and hence there’s plenty of liquidity that can address the normal level of redemptions on it.”
He added that the group has not yet seen a rush of redemption requests for these funds.
Abrdn’s wrap and elevate platforms generated £178mn in fee-based revenue, a rise of 30 per cent year-on-year, however operating expenses rose from a loss of £89mn in 2020 to a loss of £104mn in 2021.
Struggling after merger
The fund house rebranded in April last year after selling the Standard Life brand to Phoenix Group.
The group had struggled since the merger of Aberdeen Asset Management and Standard Life in 2017, with joint chief executives Martin Gilbert and Keith Skeoch both departing the business in the following years.
The firm's 2020 accounts showed net outflows of £29bn, with adjusted pre-tax profits down 17 per cent to £487mn.
Bird has previously hinted he wants to grow the firm through acquisitions, and at June 30 the firm had £2.8bn in regulatory capital, according to its results.