Legal & General H1 profit rises, performance 'well above' pre-Covid levels

Legal & General lifted its interim dividend on Wednesday as it posted a rise in first-half profit and said its performance was now "well above" pre-Covid levels, with asset management and insurance performing well.

Operating profit jumped 14% from the first half of 2020 to £1.1bn, while pre-tax profit came in at £1.1bn, up from £290m the year before. The company said all of its businesses delivered at least double-digit growth, with strong contributions from LGRI and LGIM.

"All five businesses are well positioned to execute on compelling structural market opportunities to deliver further profitable growth," it said.

The financial services provider’s solvency II coverage ratio came in at 183% from 173% and L&G declared an interim dividend of 5.18p a share, up 5%.

Chief executive Nigel Wilson said: "Thanks to the hard work and dedication of my colleagues across Legal & General, we have delivered a strong set of financial results, with EPS up 21% since H1 2019. And we expect to deliver double digit growth in operating profit at the full year.

"We are already a leading asset manager and we remain focused on continuing to scale-up our asset origination capabilities which are a unique and important component of our synergistic business model which has driven our 22% return on equity."

At 1230 BST, the shares were up 2.7% at 270.90p.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "With the disruption caused by the pandemic fading into the rear-view mirror, Legal & General is back to making the most of what we think is the most formidable operating model in the UK life insurance sector.

"Strong operating results and excellent distribution have underpinned a large and growing dividend in recent years, with the stock currently offering a yield of over 7%. That’s higher than you might expect, and we think reflects some nervousness about debt levels in particular. However, the group has so far managed the balance sheet well and CEO Nigel Wilson’s decision to stick to his guns and pay a dividend last year looks like a smart one."