AMP reports better profit but wealth struggles
AMP Limited will be hoping it has turned a significant corner, reporting a strong increase in full-year net profit to $848 million driven in large part by its AMP Bank and AMP Capital.
Its Australian wealth management business recorded a 2.5 per cent decline in operating earnings to $391 million – something which the company described to the Australian Securities Exchange (ASX) as “a resilient performance during a period of high margin compression due to final transitions to MySuper”.
The company acknowledged the decline in operating earnings but said strong growth in net cashflows and 10 per cent growth in other revenue from advice and SMSF demonstrated the underlying trajectory of the business.
The result prompted AMP chief executive, Craig Meller to reference the delivery of a “strong recovery in underlying profits and solid operating performances across the business”.
“We’ve met our targets on reducing costs, driving new revenue from our Advice and SMSF businesses and managing margin compression in wealth management,” he said. “We’ve stabilised and reinsured our life insurance business and we’ve stepped up our international growth, particularly in AMP Capital.”
Referring to the wealth management division, Meller said the company had delivered on the next phase of its goals-modelling engine, Goals 360, enabling advisers to show customers the achievability of their goals during an advice session.
Dealing with AMP Capital, the company said AMP Capital external net cashflows increased significantly to $5.5 billion (FY 16: $967 million) - the highest since the establishment of AMP Capital in 2003.
It said the cashflows reflected strong international investor interest in AMP Capital’s fixed income, real estate and infrastructure capabilities, with external assets under management fees rising by six per cent to $266 million.
The AMP board decided to maintain the final dividend at 14.5 cents a share, franked at 90 per cent. The company said the total FY 17 dividend is 29 cents a share was within AMP’s stated target range of 70 to 90 per cent of underlying profit.
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