M&G has reported a 15% year-on-year increase in its operating profit in the first half of the year, totalling £435m.

In the six months to 30 June, the FTSE 100 global investment manager saw its assets under management and administration increase by 9% year-on-year to £387bn, while its net flows from open business rose by 14% to £2.4bn, despite a "volatile external environment".

However, the firm did record a loss before tax of £165m, after it was impacted by £551m adverse short-term fluctuations in investment returns. Of this, £325m relates to proposed changes to the Government’s ground rent legislation.

Group chief executive at M&G, Andrea Rossi, stated: "I am very pleased with our progress over the first six months of the year. We delivered record adjusted operating profit, strong net inflows and continued growth in BPA volumes, while achieving positive outcomes for our customers and clients.

"The business is performing strongly, with adjusted operating profit of £435m, up 15% year on year, our best first half result since listing in 2019. We continue to execute on our strategy, successfully driving the Group towards high-quality and capital-light earnings, which now account for 80% of total adjusted operating profit.

"Net inflows from open business of £2.4bn reflect the breadth and strength of our offering, with Asset Management delivering £2.2bn of net inflows from external clients, including £0.7bn through our partnership with Daiichi Life Group."

In its outlook, M&G stated that it is well positioned to deliver "long-term financial outcomes", operating in structurally growing markets with "clear competitive strengths".

It said its strategic priorities are to maintain financial strength, to continue simplifying its business and drive profitable growth across its markets and segments.

The firm said that despite the volatile external environment that it operates in, new business momentum remains positive across the group, and as a result, it is confident in delivering continued growth in BPA volumes in the second half.

Following the announcement, shares in M&G initially dropped by around 1.2%, but recovered as the day went on, increasing marginally from its opening price.

Head of markets at interactive investor, Richard Hunter, concluded: "For the most part this is a progressive update, with M&G having dialled its momentum up a notch in a couple of key areas.

"The more recent progress which the group has made has been reflected in a share price which has risen by 30% over the last year, as compared to a gain of 17% for the wider FTSE100, and by 66% over the last two years, including a new record high in July from which the price has marginally retreated. The slowdown in capital generation due to certain financial requirements elsewhere within the group is a disappointment and may explain the dip in the share price at the open.

"However, there is more broadly the appealing combination of inflows and BPA growth which have flown past estimates, an ongoing focus on costs, larger exposure to overseas markets via the Dai-ichi partnership and a generous dividend yield. Taken together, these could result in a market consensus upgrade, where the current general view of the shares is a hold, albeit a strong one."

---