AMP's profit dives 74 per cent on the back of a rough year
Written on the 8 August 2018 by David Simmons
It's been a rough year for financial services provider AMP (ASX: AMP).
The company sure has been put through the wringer at the Financial Services Royal Commission where it surfaced that the company was charging customers fees without providing any services.
Multiple class actions soon followed these revelations, so it's little wonder the group's 1H18 results now reflect the struggle.
AMP's first-half net profit has plunged 74 per cent to $115 million (1H17: $445 million), after the company had to set aside $290 million to compensate customers it overcharged for financial advice.
Revenue for the six months was down six per cent to $7.17 billion.
Acting chief executive of AMP, Mike Wilkins, says the results reflect the tone of the year so far for the embattled company.
"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."
Whlie the company's financial foundations have been rocked, the business' wealth management sector has remained steady. AMP Capital posted an earnings rise by two per cent during the half, as earnings across its wealth management business also increased six per cent to $204 million.
"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," says Wilkins.
Wilkins says that although the boat is still rocking at AMP, he is confident that the course can be corrected.
"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," says Wilkins.
"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 business."
The company has declared an interim dividend of 10 cents per security, franked at 50 per cent.
Business News Australia
Author: David Simmons