Profits at M&G fell 44% over the first half of the year as assets under management and administration shed £21.1bn despite a return to net inflows across its wholesale business for the first time in four years.
According to the firm's half year results, adjusted operating profit before tax fell from £327m to £182m, which was attributed to current market conditions, increasing expenses and a high core cost base.
Two thirds of M&G AUM fails to meet performance expectations
IFRS loss before tax rose four-fold compared to the same period last year, up to £1.3bn from a figure of £304m. The main culprit was losses of £1.4bn across "short-term fluctuations in investment returns", which was explained mostly by shifting valuations in hedging instruments and unrealised fair value losses on surplus assets in the annuity portfolio.
Adverse market movements pushed AUMA downwards, falling £21.1bn to £349bn, despite a return to inflows for wholesale asset management.
Having recorded outflows of £3.4bn at this point last year, wholesale AM enjoyed £800m of net inflows, its first positive figure since 2018.
Institutional asset management remained in the black, but down 86% on last year's figure to £300m.
An interim ordinary dividend of 6.2 pence per share will be paid on 29 September.
M&G CIO Jack Daniels to retire next year
Outgoing M&G chief executive John Foley described the results as "encouraging" and a sign the firm is "continuing to build momentum".
"Improved client flows underpinned a resilient operational and financial performance despite a period of volatility when many investors reduced their exposure to markets," Foley added.
"The current macro-economic environment is creating uncertainty in the markets in which we operate. However, our diversified sources of earnings and strong shareholder Solvency II coverage ratio protects our ability to invest in the business and, as today's interim dividend of 6.2 pence per share shows, deliver attractive shareholder returns."
