AMP profit tanks 74%

Picture: Getty Images
  • AMP’s statutory net profit was $115 million, down 74%, in the first half, dragged down by remediation provisions.
  • Underlying profit, without provisions for remediation, was $495 million.
  • AMP declared an interim dividend of 10 cents a share, franked at 50%.

AMP’s first half profit fell 74% to $115 million, driven down by provisions to compensate customers for financial advice they paid for but didn’t receive.

Acting Chief Executive Mike Wilkins says headwinds remain for the second half of the year.

“The events around the Royal Commission into financial services have challenged our reputation, and while we continue to monitor the impacts, we have taken action to stabilise the business and move forward,” he says.

Underlying profit, without provisions including remediation of $290 million, was $495 million.

At midday, AMP shares were up 3.8% to $3.48.

AMP last month foreshadowed a first half underlying profit in the range of $490 million to $500 million, dragged down by a provision of $290 million post-tax for potential advice remediation.

The scandal of knowingly charging customers for advice they didn’t get and of misleading the corporate regulator ASIC has claimed the scalps of former CEO Craig Meller, Chairman Catherine Brenner and three other board members.

Last month Last week AMP launched a program to repair its reputation and “earn back trust”, by compensating customers for lost earnings, strengthening risk management systems and controls, and cutting fees on its superannuation products.

In the first half of 2018, AMP’s Australian wealth management operating earnings increased 6% to $204 million and assets under management rose 6% to $132 billion.

“Our first half results have demonstrated AMP’s resilience through a difficult period,” says Wilkins.

“While there will be further challenges ahead, we have a strong foundation on which to reset the business and restore the confidence of our customers and the wider community.”

AMP declared an interim dividend of 10 cents a share, franked at 50%.

Results by business unit:

Source: AMP

Wilkins says AMP has clear priorities for the second half of the year, including restoring customer confidence.

“It is continuing its actions to prioritise customers and restore confidence. The transformation of advice is underway, including the acceleration of advice remediation and reshaping of AMP’s advice network,” he says.

“Investment is being made to further strengthen risk management and controls across the business.”

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