Wednesday preview: Prudential in focus with first half results

Prudential is expected to report on Wednesday a slight increase in profit in the first half, driven by growth in Asia and in the US.

UBS forecasts the insurance giant’s operating profit increased 2% year-on-year to £1.92bn. The bank estimates growth at the Asia business of 14% to £652m and at the US division of 11% to £929m, benefiting from positive foreign exchange movements.

The UK, on the other hand, is expected to see at 14% decline in operating profit to £373m due to the first half of the previous year containing larger bulk annuity deals, skewing the comparisons.

On life new business sales, UBS expected a 7% increase to £2.9bn.

“Our outlook for sustainable growth in cash generation and dividends remains intact and we expect 10% growth in underlying cash generated to £1.5bn, Group S2 ratio ~175% and an interim dividend of 12.9p, up 5% year-on-year.”

Deutsche Bank said there will be three main areas of focus including the sustainability of Asia profits growth, the outlook for the US business, and the UK Solvency II ratio.

The bank expects the Solvency II ratio has fallen to 121% from 146%.

“Compared with a soft targeted floor on this measure of 130%, this would imply a £650m shortfall, which in a group context is not that material given that Prudential generates £1bn of excess solvency pa elsewhere in the group.

“However, it is possible that actions to improve the UK solvency could be 1%-2% dilutive to future group earnings per share. We stress, however, that this is not a threat to the group capital position.”

Wednesday 10 August

INTERIMS

New Europe Property Investments, Prudential, Sampo OYJ, Stock Spirits Group

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Crude Oil Inventories (US) (15:30)
MBA Mortgage Applications (US) (12:00)

Q2
Centamin (DI)

FINALS
Trafalgar New Homes

AGMS
Majestic Wine, Rurelec, Triad Group

FINAL DIVIDEND PAYMENT DATE
Investec, Montanaro UK Smaller Companies Inv Trust, National Grid, Ventus 2 VCT, Ventus 2 VCT 'C' Shares, Ventus 2 VCT D Shs, Ventus VCT