IOOF tips market volatility to hit results
Wealth manager flags underlying net profit to decline when it releases results on August 31.
IOOF expects to report a 33 per cent decline in full-year profit, mainly due to market volatility related to the COVID-19 pandemic.
The wealth manager, which will release its 2020 result on August 31, updated the market on Thursday, flagging an underlying net profit of $123m-$125m from continuing operations, down from $184.9m previously.
The decline was attributed to a 10.4 per cent fall in the All Ordinaries Index from June last year, which directly affected funds under management and administration (FUMA) and revenue.
Fund flows also took a hit from client concern and uncertainty about the macroeconomic environment, and there were “substantial” outflows due to the early access to super scheme, particularly in the pensions and investments (P&I) business.
IOOF expects a $25m contribution in underlying net profit from P&I for the five-month period of IOOF ownership. The contribution was adversely impacted by market volatility.
Group FUMA increased by $6.7bn, or 3.4 per cent, to $202.3bn for the quarter to June 30.
Chief executive Renato Mota said the $200bn FUMA milestone reflected IOOF’s increased scale and the benefits of diversification.
“The transformative acquisition of the P&I business contributes to our business model resilience and will be important as we look to a post-COVID-19 recovery and supporting long-term growth in FUMA and earnings,” Mr Mota said.
“The recent recovery in equity markets has been the main contributor to the $6.7bn uplift in FUMA, and pleasingly we have continued to attract strong flows into our platforms.
“That said, the impacts of the COVID-19 pandemic are continuing.
“Our advisers are seeing first-hand client concern and uncertainty around macroeconomic conditions — the pandemic is causing disruption and considerable distress to many Australians.”
While the review of IOOF’s advice remediation provisions was unaudited, the company said it was not expected to change a lot from $223m, including costs.
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