AMP profit plunges 97 per cent

Beleaguered wealth manager AMP’s profit has plummeted 97 per cent to just $28 million after taking a beating at the banking royal commission.

AMP’s full-year profit has plummeted 97 per cent to a worse-than-expected $28 million after the beleaguered wealth manager set aside millions in customer remediation and reported weakness in its superannuation business.

AMP missed last month’s guidance of a $30 million profit for the 12 months to December 31 and confirmed a much-reduced final dividend of 4.0 cents, down from 14.5 cents a year earlier.

AMP — which made a profit of $848 million in 2017 — made a total $807 million in provisions, $656 million of which was for customer remediation related to issues made public at the financial services royal commission.

The royal commission heard that AMP had charged life insurance premiums to dead clients and told regulators that clients were charged ongoing fees because of administrative errors when it was often a conscious effort by the company.

“The royal commission has been a confronting but valuable experience for the financial services industry and has served as a catalyst for change at AMP,” chief executive Francesco De Ferrari said.

“We have undertaken board and leadership renewal, accelerated client remediation and sharpened our focus on delivering better value to customers.”

Mr De Ferrari, who took over as CEO in December, said he believed the public still harboured “goodwill toward the AMP brand” and that the company could regain consumer trust.

Reputational damage was the primary reason AMP gave when explaining why customers had pulled $4 billion from its wealth management division in 2018, with earnings from the unit falling seven per cent.

Net cash outflow from Australian wealth management was $931 million in the prior year.

Operating earnings from AMP Bank rose six per cent to $148 million, helped by residential mortgage book growth.

AMP’S ANNUS HORRIBILIS

* Net profit down 97pct to $28 million

* Operating revenue down 55pct to $8.29 billion

* Final dividend down 10.5 cents to 4.0 cents, 90 per cent franked