AMP will deliver a surprise dividend to shareholders as it struggles through Covid-19’s impact on its business.
AMP’s half-year profit fell 40 per cent on 2019 figures with the embattled financial services company making $149 million in the first six months of 2020. That’s $107 million less than the $256 million recorded for the first six months of 2019.
However, AMP recently sold its life insurance pillar, AMP Life for $3.0 billion. If this division’s performance had been counted, the profit recorded would have reflected a 52 per cent fall on last year’s figures.
The country’s biggest wealth manager also posted a statutory profit of $203 million, a significant reversal in fortunes after it saw a $2.3 billion loss in 2019.
AMP shareholders will receive a special dividend of 10 cents per share as the company plans to return $544 million to shareholders. This will largely be funded by the sale of AMP Life.
The financial services company will also take on a 12 month share buyback, depending on market conditions.
Announcing the dividend payments, AMP said it won’t declare a final dividend for this financial year.
The company said the government’s early access to superannuation scheme also dented its bottom line, with 120,000 clients applying for early release. This triggered $900 million in cash outflows, while slowing investment performance and reduced transaction fees also dampened earnings.
At the same time, deposits in AMP Bank increased by $2.6 billion while its residential mortgage book also swelled by 2.9 per cent to $20.5 billion.
“With the second wave of Covid-19 impacting the economy here and overseas, we expect conditions to remain challenging,” AMP Group CEO Francisco De Ferrari said.
“However, we also see opportunities emerging over the longer term as we transform AMP to be a simpler, client-led and growth-oriented business.”
De Ferrari said driving cultural change will be critical in AMP’s path forward.
The wealth group was in dangerous waters even before the pandemic struck, after suffering significant reputational and financial damage due to revelations made in the Banking Royal Commission.
AMP also came under fire after it was revealed that newly appointed chief executive Boe Pahari had previously been fined $500,000 for sexually harassing a former colleague, but received the top job anyway.
“We’ve made progress in strengthening accountability and execution but know we have more to do.”
He said the company has established a Board culture working group and an employee-led inclusion taskforce, as well as bringing in external experts.
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