Market conditions hamper Abrdn’s revenue growth targets

Market conditions hamper Abrdn’s revenue growth targets

Abrdn’s ambitions for revenue growth will take longer than expected due to the current market uncertainty, the company has said.

In its half year results posted today (August 9), the fund house, formerly known as Standard Life Aberdeen, posted an 8 per cent drop in fee-based revenue to £696mn. This is down from £755mn in H1 2021. 

For the six months to June 30 this year, the company saw a pre-tax loss of £320mn, which it said was due to a loss of £313mn from a de-valuing of listed investments, and adjusted profit was 28 per cent lower at £115mn.

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Net outflows were £35.9bn, which the group said largely reflected the final tranche withdrawal from Lloyds Bank Group of £24.4bn.

Abrdn chief executive Stephen Bird: “The half year group results largely reflect the challenging global economic environment and market turbulence.”

The fund house posted its first increase in fee-based revenue since the merger of Aberdeen Asset Management and Standard Life in 2017 last year, taking in £1.5bn in the full year.

The group said the “sharp rotation” from growth to value has impacted its investment performance in equities and multi-asset, while performance in real assets, alternatives and fixed income is “highly competitive” over the medium and long term.

“Our long-term quality focus should fare better in the natural next phase of rotation as recessionary concerns mount.”

It added that its Asia and China expertise represents a potential counter cyclical investment opportunity as the US slows.

The group said it will target cost savings in its investment sector of £75mn in the next two years, slashing its investment in future growth.

Bird said: “When I became CEO in late 2020 I said that we would pursue a strategy of diversification by refocusing our investments business into areas of strength, where we have scale and that lean into global growth trends and also significantly expand our reach into the higher growth UK wealth market. 

“The strength of our balance sheet means that we can continue to invest and reward shareholders.”

Abrdn’s adviser division posted net inflows of £1.4bn, with a six per cent increase in fee-based revenue and a three per cent rise in adjusted operating profit.

The results include the first month of results for Interactive Investor, acquired by Abrdn earlier this year, which saw fee-based revenue rise £13mn, and operating profit jump £6mn.

Last month, Abrdn appointed Interactive Investor chief executive officer Richard Wilson as its advice boss, taking over from Caroline Connellan.