AMP turned a loss of $344 million 12 months ago into a full year profit of $848 million, as the financial services giant turns around its insurance business and cuts costs.
Revenue for the year to December was up 24% to $18.36 billion. AMP announced a steady dividend of 14.5 cents a share, franked at 90%, bringing the full year payout to 29 cents.
Costs were cut by 3%.
The profit wasn’t as high as the $972 million of two years but Chief Executive Craig Meller says it shows a strong recovery 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 says.
“We’ve stabilised and reinsured our life insurance business and we’ve stepped up our international growth, particularly in AMP Capital.”
Meller last year described the insurance industry as on the nose.
Earnings from Australian wealth protection — the insurance business – recovered to $110 million from -$415 million in 2016.
AMP cut risk by effectively reinsuring 65% of AMP’s retail life insurance portfolio.
Assets under management increased 8% to $130 billion.
In Australian wealth management, net cash flows increased 177% to $931 million, reflecting significant flow of discretionary super contributions ahead of July 2017 changes to non-concessional caps.
A mountain of cash flowed into AMP Capital. Net cash flows increased to $5.5 billion from $967 million, the highest since the establishment of AMP Capital in 2003.
The flow reflected international investor interest in AMP Capital’s fixed income, real estate and infrastructure capabilities. External assets under management fees rose by 6% to $266 million.
AMP Bank operating earnings rose 17% to $140 million, driven by a 14% rise in residential lending to $18.9 billion.
The 2017 results summary: