Wealth manager AMP has swung back to profit from a $344 million loss a year ago, following strong earnings momentum from its AMP Capital and AMP Bank businesses.
The company made a net profit of $848 million in 2017, a year after recording its first loss since 2003 on the back of a restructure of its wealth protection arm undertaken to counter a downturn in the income protection business.
AMP’s wealth protection business suffered an earnings loss of $415 million in 2016, following $485 million in capitalised losses from an operational “reset”.
The losses weighed on the company’s group underlying profit which slid to $486 million in 2016, from a $1.1 billion profit in the previous year.
AMP’s underlying profit – its preferred measure of performance – bounced back to $1 billion in 2017.
AMP CEO Craig Meller said the result showed the progress the company was making on its recovery.
“We’ve stabilised and reinsured our life insurance business and we’ve stepped up our international growth, particularly in AMP Capital,” he said in a statement.
AMP Capital and AMP Bank delivered the strongest earnings growth among the company’s six divisions, up 8.3 per cent and 16.7 per cent respectively.
The Australian wealth management segment was the strongest earnings contributor, despite growth slowing on the previous year.
In the wealth business, AMP reduced costs and achieved a 10 per cent increase in revenue from the advice and self-managed super funds arms in a performance it called “resilient”, despite a 2.5 per cent fall in earnings to $391 million as customers switched to cheaper MySuper superannuation funds.
Mr Meller also said AMP Bank had achieved double-digit growth in operating earnings while responding to tightening market regulation.
“We remain on track to double the value of the bank by full year 2021,” he said.
Shares in AMP gained 18 cents, or 3.6 per cent, to $5.21.
AMP RETURNS TO FULL-YEAR PROFIT:
* Profit of $848m, vs $344m loss in 2016
* Revenue up 24pct to $18.4b
* Final dividend up 0.5 cents to 14.5 cents, 90pct franked