AMP Ltd (AMP) - Full Year Results 2017

CommSec CommSec

08 February 2018

Results

Half Year 2018

Half Year 2017

Change

Revenue ($m)

18,361

14,799

+24%

Net Profit After Tax (NPAT) ($m)

848

(344)

+347%

NPAT consensus ($m)

878 - 941

 

 

Underlying Profit  ($m)

1,040

486

+114%

Wealth Management Earnings ($m)

391

401

-2.5%

AMP Capital Earnings ($m)

156

144

+8.3%

Final Dividend ($)

0.145

0.14

+3.6%

AMP Limited (AMP) earnings held back and muddied by substantial one-offs 

  • Wealth manager, AMP Ltd (AMP) reported a full year profit attributable to shareholders of $848 million, compared to a $344 million loss in 2016. Underlying profit was slightly below most analyst’s expectations, but still rose 114% to $1,040 million from $486 million in the same period last year.
  • AMP’s operations are comprised of six businesses for a range of financial services, most of these businesses met or bettered analyst’s performance expectations. Australian Wealth Management (financial advice and superannuation services), AMP Capital (investment management), AMP Bank (retail banking), Australian Wealth Protection (insurance products such as disability and income protection), New Zealand Financial services and Australian Mature a business which is closed to new customers and manages a range of products are being ‘run off’ or wound down, a process that is anticipated to take approximately 13 years. These products include retirement savings accounts, annuities, insurance bonds and personal superannuation.
  • Earnings in AMP’s largest business, Australian wealth management, fell 2.5% to $391 million in the period. The decline in earnings reflected several factors including downward pressure on fees charged for its superannuation services. Lending growth in the AMP Bank business delivered a 17% rise in earnings to $140 million in in the period. The difference between where the bank borrows money and lends it – the net interest margin or NIM – moved favourably increasing to 1.73% in the second half of the year compared to 1.67% in the first half. Total revenue increased 17% to $365 million over the year, reflecting growth in the size of loan portfolio.
  • There was a substantial turnaround in Australian wealth protection earnings, which bettered forecasts, improving by $525 million to $110 million in the period. New Zealand financial services earnings were short of expectations with earnings edging higher by 1% to $NZD135 million, although in translating to $AUD the measure fell by the same amount reflecting a weaker kiwi currency. Earnings at the Australian mature business were slightly lower compared to the previous year coming in at $150 million, a decrease $1 million – although that was slightly better than analyst’s forecasts.
  • Looking ahead, AMP highlighted its focus on investing in its high growth businesses, such as Australian wealth management, AMP Bank and AMP Capital while keeping controllable costs flat in the medium term.
  • AMP maintained its payment with a final dividend at $0.145 a share, bringing the full year payment to $0.29. This represents a payout ratio of 81% of underlying profit which is in line with AMP’s target range between 70% and 90% of underlying profit.

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