Will Shares In Aviva plc Beat Prudential plc, Barclays PLC, Standard Chartered PLC And HSBC Holdings plc After Results?

Are shares in Aviva plc (LON:AV) (LSE:AV.L) a better buy than shares in Prudential plc (LON:PRU) (LSE:PRU.L), Barclays PLC (LON:BARC) (LSE:BARC.L), Standard Chartered PLC (LON:STAN) (LSE:STAN.L) and HSBC Holdings plc (LON:HSBA) (LSE:HSBA.L)?

Aviva plc
Aviva plc

Shares in Aviva plc (LON:AV) (LSE:AV.L) have risen 5.7% today after it released 2016 results to the stock market. Its operating profit increased 12% to £3010 million, with operating earnings per share 3% higher at 51.1p. Those figures exclude the impact of a change in the Ogden discount rate, which Aviva has classed as an exceptional item.

Including the change in the Ogden discount rate, Aviva’s profit after tax declined 22% to £859 million. The change in the Ogden discount rate caused a £380 million after-tax charge.

In spite of this, Aviva’s dividends per share for 2016 increased 12% to 23.3p. Its dividend payout ratio is 46% against 42% last year, which shows it is progressing towards its target of 50%. Cash remittances were 20% higher at £1805 million.

Aviva’s solvency II capital surplus at the end of 2016 was £11.3 billion against £9.7 billion in 2015. Its solvency II coverage ratio was 189% against 180% a year earlier, while its solvency II operating capital generation stood at £3.5 billion. Net asset value per Aviva share increased 6% to 414p per share.

Aviva states in today’s results that it has doubled online registrations in UK digital to 5 million, while General insurance net written premiums increased 15% to £8211 million. Fund Management operating profit was 30% higher, while the value of new business in Aviva’s Life Insurance segment increased 13%.

In the last month, Aviva’s shares have risen 8%. That’s ahead of the share price performance of financial services stocks such as Prudential plc (LON:PRU) (LSE:PRU.L), Barclays PLC (LON:BARC) (LSE:BARC.L), Standard Chartered PLC (LON:STAN) (LSE:STAN.L) and HSBC Holdings plc (LON:HSBA) (LSE:HSBA.L). Shares in Standard Chartered are 6% down, HSBC’s share price has declined 4%, Barclays is 1% up and Prudential’s shares are 2% higher.

In my view, Aviva’s shares have investment appeal. I think the business is now much stronger than it was a few years ago and is in a good position to register higher earnings per share and dividends per share growth. I’m optimistic about its digital strategy, as well as the outlook for its fund management, life insurance and general insurance divisions. Therefore, I think its shares could continue to perform well on a relative basis.

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