Wealth management turns costly at AMP

AMP has suffered a slide in earnings at its wealth management division as customers shift their superannuation savings into lower-cost funds.

The financial services heavyweight revealed yesterday its net profit clocked in at $445 million for its first half — the six months to June — down 15 per cent on the same period a year earlier.

Earnings in the wealth management operation fell 1 per cent to $193 million as margins were crimped by customers shifting to lowercost superannuation funds.

Despite the profit slide, AMP said its performance had improved on an underlying basis, with earnings growth in its banking and investment divisions.

The company also said it had continued turning around its problematic wealth protection business, striking reinsurance deals that would release $500 million in capital from its life insurance arm to reduce earnings volatility and raise the possibility of a capital return.

AMP’s underlying profit — which strips out one-off items — was up 4 per cent for the half at $533 million, beating market expectations for a $529 million result.

Revenue from ordinary activities grew 25 per cent to $7.6 billion.

Operating earnings were up 11 per cent in the AMP Capital investment business as fee income climbed, and up 10 per cent in AMP Bank. Chief executive Craig Meller said AMP had continued to drive growth in banking operations and from international expansion, now managing $10 billion for 252 international clients, up from 199 clients a year ago.

“Overall, it’s a solid performance underpinned by strong cost management that steps us toward our strategy of transitioning to a highergrowth, capital-light business with a more internationally diverse revenue profile,” he said.