Decline in profit forecast for AMP
AMP has been forced to downgrade its profit and shareholder dividends as it revealed $ 565 million extra costs and reparation payments flowing from its bad financial advice.
However, the hefty amount is unlikely to be enough to repair the self- inflicted damage as the company also faces several class actions from investors, ongoing reputational damage and continued loss of market value.
Shares in the wealth management giant fell a further 5 per cent yesterday to a 15- year low.
In a statement to the Australian Stock Exchange, AMP said it has set aside $ 290 million for remediation payments to customers, $ 150 million to set up a division to find and calculate the losses to customers and $ 70 million to put in place new risk and compliance controls.
It has also, to date, spent $ 55 million complying with royal commission requirements.
The company has warned shareholders to expect reduced dividend payments and notified the market that it has cut some superannuation fees which will reduce its future annual fee income by $ 50 million a year.
The hefty dump of bad news was made by acting AMP chief executive Mike Wilkins just two weeks before the company is due to announce its profit result for the six months to June.
Mr Wilkins said the company had downgraded its forecast half- year profit to between $ 490 million and $ 500 million, compared with $ 553 million a year ago. He also confirmed a $ 20 million loss after the cancellation of a large group insurance plan by a customer.