Standard Life takes a swipe at Prudential dividend hike

Standard Life took a swipe at Prudential's decision to curry favour with investors with a 20pc dividend hike this week, saying it preferred to offer a more consistent income stream.

Jackie Hunt, Standard Life's finance director said: 'We are not in the business of announcing 20pc increases after 30pc cuts. We don't believe in that.'

She was referring to a savage 38pc reduction in Prudential's dividend in 2003, which has been followed up by rather pedestrian increases until now.

Standard Life offices in Edinburgh

Not a winning hand: Standard is doing the best with the 'set of cards' it was dealt

Hunt reckons the 6pc increase in Standard Life's payout to 13p for last year was quite enough. Arguably, the group couldn't afford any more anyway and it still yields 6pc.

Investors however, marked Standard Life's shares down by 17.8p to 226.9p, having yet to be persuaded that the future looks bright. The shares have risen 20pc over the last year but are still just below the 230p at which it floated at after demutualising in 2006. 

 

The firm still has 1.4m small shareholders and more than 4m savings customers.

Chief executive David Nish said Standard Life was doing the best with the 'set of cards' it was dealt at demutualisation. He is shifting the focus towards less volatile fee-based income, where the firm receives a percentage of the savings or pension assets that it manages.

This means the group doe not have to hold as much capital as it would do if it was focused on annuities  -  seen as higher risk because of the difficulty in determining how long policyholders will live for.

The Edinburgh- based firm announced an operating profit of £425m for last year, higher than forecast because of a £59m boost due to a change to some of its staff pensions. Stripping this out, profits were lower than the £399m seen in 2009.

Fee-based revenues rose strongly in the UK, but the performance from the group's overseas businesses were mixed. Despite the weak Irish economy, Standard Life saw strong growth there as consumers put their cash into investments rather than property.

Hong Kong and India were also fast-growing, but Germany saw a decline in sales. China was a disappointment after hopes for a distribution deal with its bank were dashed.

Nish said he has shaken the company up, changing 40 people among the top management team and promoting 'a mixture of grey hairs and young vigorous talent'.

The focus is now on winning new business and improving customer service.

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