Super switchers bad news for 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. The market did not like the news, sending AMP’s shares 2.6 per cent, or 14¢, lower to $5.27.

AMP’s earnings for its wealth management division fell 1 per cent to $193 million as margins were crimped by customers shifting to lower-cost 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 turnaround work in 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 was up 4 per cent for the half at $533 million, beating market expectations. Chief executive Craig Meller said AMP had continued to drive growth in its banking operations and from international expansion.