Prudential plc Half-Year 2025 Financial Analysis: Robust Performance, Enhanced Shareholder Returns

Prudential plc has released its half-year 2025 results, showcasing strong operational and financial performance. The company’s strategic focus on quality growth, consistent capital management, and shareholder returns is evident in its double-digit growth across key metrics. This article analyzes Prudential’s latest financials, capital management updates, and outlook, providing a clear overview for investors.

Key Financial Metrics

Prudential delivered notable growth in earnings, new business profit, and funds under management during the first half of 2025. The company also announced substantial capital returns, including share buybacks and increased dividends.

Dividend and Capital Management Update

• First interim dividend increased by 13% to 7.71¢ per share.
• Share buybacks: 72 million shares repurchased for \$711 million in H1 2025, with \$1.5 billion completed as part of the ongoing \$2 billion buyback program.
• Guidance for >10% annual dividend growth for 2025-2027.
• Additional capital returns announced: \$500 million buyback planned for 2026, \$600 million for 2027.
• More than \$5 billion expected to be returned to shareholders over 2024–2027.
• Potential return of net proceeds from the proposed IPO of ICICI Prudential Asset Management Company Limited (IPAMC).

Historical Performance Trends

Prudential has demonstrated a consistent pattern of double-digit growth in new business profit, operating free surplus, and basic EPS (adjusted operating profit). The operating return on embedded value rose to 15% in H1 2025 from 13% in H1 2024. Funds under management via Eastspring increased 11% year-on-year, and the new business margin on APE widened by 2 percentage points to 38%.

Chairman’s Statement and CEO Commentary

“We are pleased with our strong performance in the first half of 2025, delivering double-digit growth across our key metrics in line with the guidance we gave earlier in the year. We have reached the inflection point in our capital generation, enabling us to update our capital management programme and increase shareholder returns, which validates our business model and its ability to generate sustainable cash returns. Reflecting our strategic progress and investments in the growth drivers of the business, we are confident we will carry this momentum into the second half and beyond, keeping us firmly on track to achieve our 2027 financial objectives.”

The tone is highly positive, emphasizing confidence in strategic execution, capital strength, and the ability to deliver on long-term objectives.

Share Buybacks and Dilution

• Completed purchases of \$1.5 billion as part of the \$2 billion share buyback programme (accelerated to complete this year).
• Weighted average number of shares reduced by 5%.
• Ongoing buybacks expected to continue, with further capital returns planned for 2026 and 2027.

IPO, Divestments, and Corporate Actions

• Intends to return initial net proceeds from the proposed IPO of ICICI Prudential Asset Management Company Limited, subject to market conditions and regulatory approvals.
• Exited life insurance businesses in Cameroon, Côte d’Ivoire, and Togo.
• Issued SGD 600 million subordinated debt in Asian currency markets at a 3.8% coupon, demonstrating credit strength and access to capital.

Macroeconomic & Regulatory Risks

• Ongoing volatility from global economic and geopolitical factors, including inflation, interest rate movements, and protectionist policies.
• Heightened regulatory and sustainability-related risks, especially around climate disclosure and ESG standards in Asia.
• Robust capital buffers: Free surplus ratio at 221%, GWS shareholder coverage ratio at 267%, both above targeted operating levels.

Exceptional Earnings, Expenses, and Fund Flows

• Positive short-term fluctuations in investment returns (\$72m in H1 2025 vs \$(1,081)m in H1 2024) due to lower interest rates in key markets.
• Losses on corporate transactions (\$16m) mainly due to currency translation after disposals.
• Restructuring costs declined to \$87m from \$98m in H1 2024.

Forecast & Outlook

• Prudential expects to grow new business profit, EPS (based on adjusted operating profit), and operating free surplus by more than 10% in 2025 (constant exchange rate basis).
• Confident in achieving 2027 objectives: \$4.4 billion operating free surplus generation from in-force insurance and asset management, and 15–20% CAGR in new business profit from 2022 baseline.
• Dividend growth guidance of >10% per annum for 2025–2027.

Conclusion & Investment Recommendations

Overall Assessment: Prudential’s half-year 2025 results reflect a robust financial position, strong double-digit growth in key performance metrics, disciplined capital management, and an ambitious shareholder return policy. The outlook is positive, underpinned by continuing momentum, resilient capital buffers, and effective execution of strategic initiatives.

• If you are currently holding Prudential stock:
  • The results and guidance suggest continued strong performance and increased shareholder returns. The accelerated share buybacks and rising dividends are positive for existing investors. Holding is recommended, with the potential to increase exposure if seeking defensive, resilient financial sector growth and income.
• If you are not currently holding Prudential stock:
  • Given the consistent delivery, strong capital position, and forward guidance for double-digit growth and enhanced capital returns, initiating a position could provide exposure to quality growth and increasing dividends, especially if seeking financial sector investments with emerging market exposure and robust risk management.

Disclaimer: This analysis is based solely on the information disclosed in Prudential plc’s half-year 2025 financial report. It does not constitute financial advice. Investors should consider their own circumstances and conduct further diligence before making investment decisions.

View Prudential USD Historical chart here