A sharp drop in profit reflects the impact of the low interest rate environment, Montreal-based Standard Life Financial Inc. said Tuesday.

Standard Life reported net income of $80 million for the first half of 2012 ended June 30, compared with $256 million in the first half of 2011.

Momentum in new business was maintained with overall premiums and deposits increasing 13% to $1.3 billion for the second quarter of 2012, up from $1.2 billion in Q2 2011. The growth was driven by a solid performance in the company’s group savings and retirement business, up 15%, and its retail business, up 16%.

Assets under administration grew 5% to $42 billion at the end of the second quarter, up from $40 billion a year earlier, driven by net inflows and positive market movements.

Group savings and retirement premiums and deposits increased 15% to $709 million, up from $616 million a year earlier, while the company saw a strong performance in its core business segment of defined contribution plans with premiums and deposits up 21% to $606 million from $499 million a year ago.

The company’s group benefits and disability management business premiums slightly increased 1% to $178 million.

Premiums and deposits for retail products (excluding life insurance products) were up 16% to $418 million from $359 million resulting from a strong demand for Standard Life’s Ideal Segregated Funds, which grew 31% to $265 million from $202 million a year ago. In addition, Standard Life increased its mutual funds market share with a 25% rise in sales to $106 million from $85 million a year ago due to improved fund performance and an enhanced product line-up.

“Following the appointment of the new Canadian management team during the first half of the year, we expect improved operating performance as we focus on our expertise and opportunities in long-term savings and investments,” commented Charles Guay, president and CEO.

Montreal-based Standard Life Assurance Company of Canada, Standard Life Financial’s main operating subsidiary, reported a solvency ratio of 214% at the end of June compared with 204% at December 2011.