M&G delivered £837m in adjusted operating profit before tax in 2024, an increase of 5% on the previous year, amid cost cutting and ongoing progress to simplify its asset management business.
In the group’s annual results announced today, asset management profits grew by 19% to £289m driven by a 1% increase in revenue and a 2% reduction in operating costs. However, this was partially offset by a £9m reduction in the Life business following decreases in with-profits and shareholder annuities.
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Meanwhile, net flows from open business stood at £1.9bn, up from £1.7bn last year, and operating capital generation stood at £933m, compared with £996m in 2023.
In 2023, M&G embarked on a transformation plan setting out a strategy for ambitious growth and a more simplified business model for its asset management business. This year’s annual report said M&G “continued to deliver good momentum on our transformation programme to create a leaner and more efficient organisation; improving our ability to serve clients, reduce costs and unlock growth”.
This also included combining the life and wealth businesses under the leadership of Clive Bolton. Group CEO Andrea Rossi (pictured) said the transformation plan had so far delivered £188m in savings.
Elaborating further on progress in the asset management division, the report said: “We are starting to see the impact of the actions to grow and simplify the asset management business as part of our strategy. Cost reductions from the delivery of initiatives that are part of our transformation programme more than offset the impact of inflation and demonstrate the continued focus on cost discipline. This is reflected in the improvement in the cost/income ratio for the asset management business to 76% (2023: 79%).”
Assets and flows
Assets under management and administration (AUMA) for M&G as a whole increased by £2.4bn to £345.9bn. This was driven by “favourable market movements”, but was offset by total net outflows of £9.3bn – outflows for 2023 were recorded at £4.7bn. M&G also flagged the acquisitions of Continuum and BauMont Real Estate Capital as boosts to the AUMA in 2024.
For the asset management business, net client outflows stood at £900m, compared with £800m the previous year, which reflected “net neutral flows in wholesale despite challenging market conditions and an improvement in net client outflows in UK institutional as we continue to grow the international business”, the group said.
Specifically in the wholesale asset management division of the business, the report said: “Challenges seen in the market throughout 2024 are reflected in the net nil flows (2023: £1.5bn net inflows). We continue to feel the impact of some clients adjusting their investment strategy to low risk alternatives, particularly in the UK. This has been offset by growth in our specialised Investment Solutions channel, which secured further mandates and net inflows during 2024.”
Dividend policy
M&G also announced a new progressive dividend policy as 2024 total dividend per share increased by 2% to 20.1p. This, the report said, reflects the confidence in the outlook for the business. Last October, M&G paid shareholders an interim ordinary dividend of £157m, equal to 6.6p per share and, under the progressive dividend policy, a second interim dividend of £321m, equal to 13.5p per share, will be paid on 9 May 2025, totalling 20.1p per share paid to shareholders for 2024.
Outlook
Group CEO Rossi commented on the annual results: “In 2024 we delivered meaningful progress across our three strategic pillars of financial strength, simplification and growth. Our balanced and integrated business model, based on gathering assets and investing for the long term remains a source of competitive advantage, underpinning progress across our business and enabling us to thrive together with our colleagues, customers, clients, shareholders and communities.
“As I look ahead to 2025, the environment we operate in remains challenging. Increased geopolitical uncertainty and market volatility continue to weigh on customer and client sentiment and pose a significant challenge to financial institutions across the globe. At M&G, we are confident that we can navigate this uncertain environment by leveraging the strength of our business model which we believe will remain a source of competitive advantage.
“As we move into the next phase of our transformation we remain focused on delivering sustainable, profitable growth for our shareholders and attractive outcomes for our customers and clients.”
This story was written by our sister title, Portfolio Adviser
