abrdn H2 Earnings Call Highlights

Key Points

• Abrdn reported group adjusted operating profit up 4% to £264 million, exceeded its cost‑savings target by delivering £180 million (vs a £150m goal), and saw AUMA rise 9% to £556 billion.
• Interactive Investor is now the largest contributor, accounting for 59% of group profit with customers up 14% to c.500,000 and operating profit rising 34% to £155 million.
• The transformation is about 90% complete and abrdn reiterated 2026 targets of at least £300 million adjusted operating profit and around £300 million net capital generation, plus a new ambition to grow net capital generation by 5–10% annually.

abrdn LON: ABDN executives told investors the group made “significant progress” in 2025 as it pursued its ambition to become the U.K.’s leading wealth and investments group, pointing to higher profits, strong momentum at interactive investor (ii), and an ongoing repositioning of its investments business.

2025 profit growth and 2026 targets reaffirmed

Chief Executive Officer Jason Windsor said 2025 delivered higher group profits, growth in wealth, and continued repositioning in investments. The group reported adjusted operating profit of GBP 264 million, up 4% year-over-year, which management said reflected very strong performance in ii and improved efficiency in investments, more than offsetting actions taken to reposition the Adviser business.

Management reiterated group targets for 2026 of at least GBP 300 million in adjusted operating profit and around GBP 300 million of net capital generation. Looking beyond 2026, Windsor said the company is now targeting 5% to 10% annual net capital generation growth on average, absent major market irregularities.

IFRS profit lifted by Standard Life (Phoenix) valuation gains

Chief Financial Officer Siobhan referenced a sharp rise in IFRS profitability. IFRS profit before tax was GBP 442 million, up 76% from 2024. She said the increase was “largely driven” by a GBP 236 million rise in the fair value of the group’s strategic investment in Standard Life, formerly known as Phoenix.

The group maintained its dividend in line with policy at GBP 0.146 per share. Management said dividend cover on both an adjusted and net capital basis was broadly unchanged from the prior year.

Interactive investor becomes largest profit contributor

Executives repeatedly highlighted ii as a key driver of group performance. The platform ended 2025 with half a million customers, up 14%, with SIPP accounts up 30%. Net inflows increased 28% to GBP 7.3 billion, contributing to a 26% rise in assets under administration (AUA/AUMA) with support from markets.

Financially, ii’s revenue rose 19% to GBP 330 million. Trading revenue increased 44% to GBP 101 million, supported by record activity, including higher international trading. DARTs rose 32% to more than 26,000. Treasury income grew 17% to GBP 161 million, driven by higher average cash balances, though cash margins dipped to 221 basis points from 229 basis points in 2024. Subscription revenue increased 3% to GBP 62 million.

Expenses increased 8% to GBP 175 million, which management attributed to investments in brand awareness and proposition development (including ii Community, ii360, and ii Advice) and added capacity to support growth. The cost-to-AUMA ratio improved from 19 to 18 basis points. Adjusted operating profit rose 34% to GBP 155 million, making ii the group’s largest contributor to profitability.

For 2026, management said new simplified pricing introduced in early February is expected to reduce FX and trading fees, but this should be “more than offset” by higher subscription revenue and Treasury income, with cash margin slightly lower. Windsor told analysts early 2026 activity and growth were strong, adding he believed Q1 2026 would be ii’s best quarter ever, with a “pretty strong start” to the year.

Adviser repricing pressured profit as flows improved

In the Adviser business, management said strategic repricing weighed on profitability but contributed to improved competitiveness and service recovery. Net outflows improved 44% year-over-year in 2025, though the company noted an uptick in outflows late in the year tied to tax-free cash withdrawals rising about GBP 250 million above normal levels following the U.K. budget in the fourth quarter.

The repricing was described as necessary and was cited as the main driver of a 14% reduction in revenue. Treasury income on client cash balances fell 10% to GBP 30 million, and management expects cash margin to be lower in 2026 due to base rate cuts. Expenses were GBP 190 million, higher due to the end of a temporary outsourcing discount in February 2025. Adjusted operating profit declined 32% to GBP 86 million.

Operationally, Windsor said Adviser service and proposition improvements contributed to better flows. The company reported call hub NPS increased to +45 from +34 a year earlier. It also highlighted the launch of the Aberdeen SIPP, saying more than 1,800 new SIPPs were opened in the first three months after launch and that Defaqto awarded gold service ratings to the Wrap and Elevate platforms (upgraded from silver). Management said it is targeting net positive flows in 2026, while the goal of achieving GBP 1 billion of net flows was deferred to 2027.

Investments: flows improved, margins still under pressure; Stagecoach deal detailed

In investments, executives said leadership focus on efficiency, performance, and flows contributed to improved momentum. Excluding volatile liquidity flows, the institutional and retail wealth book returned to a small net inflow in 2025, a GBP 4.8 billion improvement from the prior year, supported by a 55% improvement in gross flows. Management cited mandate wins in quants and fixed income, strong demand for commodities, and the agreement to manage the GBP 1.2 billion Stagecoach pension scheme assets.

Three-year investment performance improved to 80% outperformance, above target, and Morningstar 4- and 5-star ratings covered 42% of AUM. However, revenue in the I&RW book declined, reflecting annualization of flows and asset mix shifts. The company said total average AUM was up 1%, with average equities AUM down 13% and average quants AUM up 26%. Revenue yield fell by 2.8 basis points to 28 basis points. Insurance partners net outflows increased to GBP 6.8 million, and that segment’s revenue was 13% lower with yield down to 7.4 basis points.

Cost actions remained central: transformation initiatives helped reduce investments expenses by 8%, driving a 5% increase in adjusted operating profit to GBP 64 million. For 2026, management guided to a headline revenue margin of approximately 19 basis points, with expenses partly benefiting from transformation savings but offset by investment and inflation. The company also cautioned that Q1 2026 investment net flows are expected to include roughly GBP 4 billion of outflows from known equity mandates, including Murray Income Trust. In Q&A, executives said the mandates span a range of fee rates, and one mandate carries a margin materially lower than the book average.

Siobhan also detailed the Stagecoach transaction, describing it as a deal that combines the group’s investment capabilities and balance sheet strength. The arrangement brings assets into the solutions franchise with annual investment management fees of about GBP 3 million to GBP 4 million, and management said the group is entitled to a minority share of any future distributed surplus, subject to trustee approval. The scheme is not consolidated on the balance sheet; the surplus entitlement is accounted for under IFRS 17, with a present value of expected future cash flows of GBP 63 million and an expected annual benefit of around GBP 3 million in adjusted operating profit from 2026.

Across the group, the transformation program delivered GBP 180 million in annualized run-rate savings, exceeding the original GBP 150 million target, with 239 initiatives completed by year-end. Management expects roughly GBP 30 million of residual annualized benefit to be reflected in 2026.

Capital generation also improved. Adjusted capital generation increased 5% to GBP 323 million, while net capital generation was GBP 239 million, held back by GBP 84 million of restructuring and corporate transaction expenses (net of tax). The group also discussed actions to unlock value from its defined benefit pension surplus, contributing GBP 16 million in the second half of 2025 and expected to benefit capital generation by about GBP 35 million in 2026.

On capital strength, the company moved to an internal capital assessment at year-end 2025, reducing regulatory capital requirements by 17% to GBP 879 million. CET coverage improved to 163% (from an equivalent of 139% at the end of 2024), and total coverage rose to 218% from 198%. Management said it expects to operate with total capital coverage of 140% to 180% as it reduces debt and continues investing in the business.

About abrdn LON: ABDN

Aberdeen is a Wealth & Investments group that connects investors to the expertise, tools, and solutions they need to grow and manage their wealth with confidence. We are structured around three businesses – interactive investor, Adviser and Investments. As a diversified group, we have positioned ourselves for growth in a changing investment landscape. As at 31 December 2025, Aberdeen manages and administers £556bn of client and customer assets.

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