By Pushkala Aripaka
(Reuters) -Britain’s M&G reported a surprise rise in annual profit on Wednesday helped by cost cuts and growth in its asset management business, sending its shares to a one-year high.
Asset managers such as M&G which make active investment decisions have faced tough trading conditions in recent years due to inflationary pressure and investors turning to passive, or index-tracking, funds which charge lower fees.
But CEO Andrea Rossi made a case for active investing, saying current volatility and the macroeconomic and geopolitical backdrop “plays a little bit into our strength”.
Rossi said major European and UK markets were back on clients’ radar, and the downward trend in interest rates was also a positive.
M&G forecast that adjusted operating profit before tax would grow at 5% or more a year on average to the end of 2027, by when it also expects to generate 2.7 billion pounds of operating capital.
The company, which made a comeback into corporate pensions insurance in 2023, also increased its dividend for 2024 by 2%.
However, total outflows of 9.5 billion pounds ($12.32 billion) for 2024 were bigger than analysts’ consensus of 7.2 billion pounds.
M&G’s shares rose as much as 4.5% but pared gains to trade 2.9% higher by 1125 GMT.
At least two brokerages said investors might be disappointed with the dividend, with Jefferies analysts adding that their “enthusiasm is further dampened by the net flows, which are a notable disappointment”.
Total adjusted operating profit before tax rose 5% to 837 million pounds last year, against expectation for an round 4% dip to 769 million pounds.
($1 = 0.7712 pounds)
(Reporting by Pushkala Aripaka and Yamini Kalia in Bengaluru; Editing by Mrigank Dhaniwala, Kirsten Donovan)
