AMP issues special dividend to shareholders despite COVID-19 impacting earnings and profit

Wealth group AMP will return millions of dollars to shareholders despite profit slipping due to the coronavirus pandemic.

AMP has been able to a post a profit for the first six months of 2020. Hollie Adams/The Australian

Major wealth group AMP has seen its underlying profits almost half as heightened market volatility induced by the coronavirus pandemic dents earnings within its core business.

Its underlying profit was $149 million for the six months ending June 30, a 42 per cent tumble compared to the 2019 financial year.

In its update to the Australian Stock Exchange on Thursday, the embattled wealth provider’s chief executive Francesco De Ferrari acknowledged the deep rooted culture problem systemic throughout the organisation.

“We’ve made progress in strengthening accountability and execution but know we have more to do,” he said.

“To accelerate change, we’ve implemented a number of immediate actions including establishing a board culture working group and an employee-led inclusion task force, as well as working with an external expert to drive inclusive leadership.”

AMP’s statutory profit was $203 million for the six months ending June 30, a major turnaround from the $2.3 billion statutory loss in 2019.

The statutory profit rise is partly off the back of the sale of its life insurance division, which allowed an inflow of $3 billion from its sale.

AMP said the surplus of capital had enabled it to issue a special dividend of 10 cents per share, in an initiative to return $544 million to shareholders.

At June 30, AMP’s capital surplus was $1.4 billion.

Mr De Ferrari said the resurgence of COVID-19 cases was impacting the economy but had not steered the company away from its transformation commitments.

“With the second wave of COVID-19 impacting the economy here and overseas, we expect conditions to remain challenging,” Mr De Ferrari said.

“However, we also see opportunities emerging over the longer term as we transform AMP to be a simpler, client-led and growth-oriented business.”

AMP said its earnings had been impacted by COVID-19, with the group provisioning a credit loss of $24 million and a devaluation of its capital business by $16 million.

Operating earnings in its wealth management business fell 43 per cent to $59 million, while earnings in AMP Capital dropped 40 per cent to $72 million.

AMP Bank’s interim earnings declined 30 per cent to $50 million and its New Zealand wealth management business fell 18 per cent to $18 million.