In the US, it made stronger strides, with profits up 15 per cent to pounds 176m. The improvement was even better in local currency, up 23 per cent. As a mark of confidence, the dividend was lifted 10.3 per cent to 6.4p.
Yet problems lurk behind the successful exterior. The pensions mis-selling scandal cropped up again, with the Pru almost doubling its provision for the problem to pounds 450m, although this will not impact on statutory profits. The cloud has affected the business, but there is a change in the air for most of the big providers. The economic cycle, for one, is in the Pru's favour at present. As disposable income rises, and employment picks up, people turn to thoughts of the future, and how they can save for a rainy day. The belief the state can provide us with the cradle-to-grave care has died a death - most people are conscious of the need to provide for themselves. The Pru can only benefit from this change.
Elsewhere, its entry into new products and markets looks to be paying off. Prudential Banking, its telephone mortgages and banking business launched last October, , has attracted pounds 250m in mortgage applications and pounds 274m in deposits. Sir Peter Davis, group chief executive, said plans to acquire a branch network had been put on hold. But rumours of talks with National Westminster Bank shows the scope of its ambitions. It is set to emerge as one of the key players in the new retail financial services industry.
If and when it succeeds in gaining a high-street presence, it will be a formidable machine. Despite a cooling of its acquisitive urges, it won over Scottish Amicable earlier this year for pounds 485m - although the deal will cost the Pru pounds 2.87bn in total.
On the basis of these figures, and looking ahead at the prospects for the group as a whole, the business has to be rated as one of the strongest players in its sector. Yet two points niggle. First, the bull run in the stock market has been propelled by gains from financial stocks. The Pru's shares have almost doubled over the last two years, although they have slipped over worries about the changes to advance corporation tax. A stock market correction would hit the most highly rated shares, of which the Pru is one. And while prospects look rosy, predicting the turn has always been a black art. In six months' time, the mood could have changed. On its current demanding rating, the shares are only a buy for the investor with the longest-term horizons.
RICHARD PHILLIPSReuse content