Legal & General lifts dividend as FY profits rise

Legal & General reported a jump in 2021 profit on Wednesday and lifted its dividend as it benefited from a post-pandemic economic recovery and an easing of restrictions.

Full-year pre-tax profit rose 39% to £2.49bn, while profit after tax was up 28% to £2.05bn, exceeding $2bn for the first time. Earnings per share were 72% higher compared to 2020 at 34.19p, and 19% above 2019.

Operating profit was 11% higher on the year at £2.25bn, consistent with the double-digit guidance provided at the first-half results. Meanwhile, the solvency II coverage ratio was 187%, up from 175% a year earlier.

The company's return on equity came in at 20.5% versus 17.3% the year before and L&G declared a full-year dividend of 18.45p, up 5% on the year.

L&G hailed "good" new business volumes and "strong" net flows. The company's alternative asset or capital investment business, LGC, saw the biggest gain in operating profit, up 68% to £461m, underpinned by a bounce-back in the housebuilding market and valuation increases.

Chief executive Sir Nigel Wilson said: "The expected reform of Solvency II, the roll-out of the UK government's levelling up programme, and our growing international businesses underscore our confidence in our ability to continue delivering on a broad range of profitable growth opportunities."

At 0825 GMT, the shares were up 3.3% at 253.31p.

Keith Bowman, investment analyst at Interactive Investor, said: "In all, a combination of economic and geopolitical tensions offer some uncertainty around the outlook. Intense competition in the asset management industry is also worth remembering, as is the group’s exposure to the cyclical housing market through its capital investment business.

"On the upside, L&G’s exposure to ageing demographics and pension provision remains central. An investment management business with over £1 trillion of assets under management is no small player, and its five business divisions inject some degree of diversity. For now, and with its shares sat on a historic and estimated future dividend yield of over 7%, analyst consensus opinion continues to point towards a buy."