Troubled AMP has released its first half financial results, with acting chief executive Mike Wilkins saying they demonstrate “resilience through a difficult period.”
In the first half of 2018, AMP’s underlying profit reached $495m, compared to $533m in H1, 2017, while net profit reached $115m, compared to $445m last year, reflecting the “advice remediation provision” announced in 27 July.
Despite the overall losses, “strong growth” was reported by AMP’s banking arm with earnings up 20% on H1 2017, reaching $78m, driven by an 8% increase in the residential lending book to $19.7bn and improved deposit margins.
“Continued momentum” in AMP Capital saw operating earnings increase 2% due to investment in “real assets capability and international expansion”.
Operating earnings in AMP’s wealth management business increased 6% to $204m, with assets under management also up 6% to reach $132bn. The results were described as “resilient in a challenging environment”.
However, Australian wealth protection profit margins declined $3m compared to H1 2017 to total $46m and operating earnings collapsed to $1m due to “higher than expected claims activity and reserve strengthening on a large terminated group plan.” In H1 2017, operating earnings stood at $52m.
Elsewhere in the business, strong performance on controllable costs puts AMP on track to “at least achieve” its FY 18 cost guidance and the group holds surplus capital of $1.8bn above minimum regulatory requirements.
Wilkins said, “Our first half results have demonstrated AMP’s resilience through a difficult period. 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.”
He added, “AMP Bank and AMP Capital have continued to grow and our Australian wealth management business has again shown its ability to respond to changing market circumstances, broadening its revenue base and managing its controllable costs.”
The results come as AMP faces its own shareholders in court over claims it withheld information relating to its fees for no service scandal and dealings with ASIC. The shareholders claim the information should have been disclosed to them.
Wilkins added, “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.
“Headwinds remain for the second half of the year, but our focus is clear. We’ll continue to prioritise our customers, putting their interests first. We’ll progress the transformation of our advice business, strengthen risk management and accelerate the portfolio review aiming to release further capital from our manage for value businesses.”
Supporting this work, AMP also announced the appointment of former Secretary to the Australian Treasury, John Fraser to its board as non-executive director, effective from September 2018, subject to pre-appointment processes.
Wilkins concluded, “We’re driving change right across the business and are dedicated to delivering the services that are critical to our customers and the Australian economy, helping to earn back trust in AMP.”
In its statement, AMP pledged to prioritise restoring customer confidence and said “the transformation of advice is underway”. This includes the “acceleration of advice remediation and reshaping of AMP’s advice network.”
Further, “Investment is being made to strengthen risk management and controls across the business. As previously announced, AMP has also re-prioritised the portfolio review of its manage for value businesses. AMP is also focused on maintaining momentum in its growth businesses.”
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