Standard Life has said its earnings have been bolstered by cost-cutting as it targets another £800 million worth of “synergies” from its takeover of Aegon UK.

The retirement specialist is preparing to complete the acquisition by the end of the year, creating a major force in the pensions and savings market.

The company reported an operating profit, adjusted for what it deems as one-off costs, of £563 million for the first half of the year, up by 25% compared with the same period last year.

This was driven by income growth from its two main business units – pensions and savings, up 36% year-on-year, and retirement solutions, up 13%.

The firm said it was on track to achieve its target of around £1.1 billion adjusted operating profit for the full year.

Standard Life said this comes after making £210 million worth of cost savings as part of a three-year £250 million cost-cutting target, which it is on track to meet by the end of 2026.

It said it had used technology, including artificial intelligence (AI), to “reshape” the organisation and create a more efficient and simplified business.

Furthermore, the acquisition of Aegon UK, agreed in April, is expected to generate around £800 million of “synergies” on net as the two businesses merge parts of their operations.

The takeover is expected to complete around the end of 2026, subject to it being approved by regulators, and will create a pensions and savings giant with some 16 million customers and £480 million assets under administration.

However, on a reported basis, Standard Life said it generated a loss of £179 million for the first half of the financial year.

This was driven by £473 million worth of costs related to efforts to hedge the business against volatility in equity markets and interest rates.

The company said the strategy was designed to protect its cash, capital and dividend for shareholders.

Standard Life, which manages around £333 billion assets on behalf of 12 million customers, said it was continuing to operate in an “environment with heightened global geopolitical and macroeconomic volatility”.

“Notwithstanding this challenging backdrop, the UK consumer retirement needs we serve are long term in nature and enduring,” the firm said.