Prudential profits buoyed by bumper growth in Hong Kong

Prudential saw its new business profit rise sharply in the last year, amid strong growth in Hong Kong. 

New business profit reached $3.13billion (£2.5billion), up 45 per cent year-on-year, helping the company swing to an IFRS profit after tax of $1.71billion, against a loss of $1billion in 2022. 

Just short of half of the firm's new business profit for the year came from Hong Kong. 

The group declared a second interim cash dividend of 14.21 cents, bringing the annual dividend up to 20.47 cents per share, up from 18.78 cents the previous year.

In charge: Prudential's chief executive, Anil Wadhwani

Prudential shares increased 1.38 per cent or 10.80p to 791.40p on Wednesday, having fallen over 20 per cent in the last year. 

Policy sales across the insurance firm's key markets in Asia and Africa propelled revenue growth. 

The group, which is dual-listed in London and Hong Kong, benefited from strength in its agency and bancassurance distribution channels, its asset management business Eastpring and lower central costs. 

Chief executive Anil Wadhwani, said: 'These are a very strong set of results while operating in a challenging macro environment, with new business profit up 45 per cent driven by a relentless focus on execution in our markets in Asia and Africa.

'It is also an illustration of the strength of both our agency and bancassurance distribution channels as well as an affirmation of our leadership position in many key markets.'  

In August, Prudential forecast its near-term strategy to generate 15 per cent to 20 per cent compound annual growth in new business profit by 2027, and achieve double-digit compound annual growth in operating free surplus in the same period. 

On Wednesday, Prudential said it was 'increasingly confident' in meeting its long-term targets.  

Richard Hunter, head of markets at Interactive Investor, said: 'Prudential has a new purpose and a new strategy, and the early signs of this refreshed focus after a change at the top are extremely encouraging.'

He added: 'The underlying strength of the business, which is also enabling high investment into the refreshed suite of products, is evidenced by a capital cover ratio of 295 per cent and a further hike to the dividend. 

'Even so, unlike some of its sector peers shareholder returns are not a guiding light and the projected dividend yield of around 2 per cent is pedestrian in comparison.

'Unfortunately the economic clouds which have hung over the likes of China more recently have had a detrimental effect on the share price for Prudential, if not for its long term prospects.

'Nonetheless, this lag in the share price has seemingly strengthened the resolve of bulls of the stock, who remain highly confident of the group’s longer term prospects, as evidenced by a market consensus which continues to come in as a strong buy.'