AMP said yesterday its first-half net profit dipped 3% to $382 million, but the company lifted its interim dividend 8.7% to 12.5c a share.
Excluding investment market volatilities and write-downs, AMP’s underlying profit rose 16% to $510 million in the six months ended June 30 from $440 million in the first half of 2013.
That was more to the liking of the company and its CEO Craig Mellor.
“This is a solid result with 16 per cent underlying profit growth. We have made good progress on our strategy to be a leaner, more efficient and increasingly customer-driven organisation,” Mr Meller said in a statement to the ASX.
He justified the boost to the dividend, arguing the group had lifted underlying earnings 16% and the 73% payout ratio was well within the company’s target policy of 70% to 80% of underlying earnings.
The market liked the higher payout and the shares rose 4.2% to $5.75.
He said it was “particularly pleasing” that AMP’s offshore strategy was “already delivering good cashflows while building strong growth potential in the long term” from its partnerships in China and Japan.
“This wealth protection business is stabilising, with the improvement plan delivering encouraging results. However, we have more work to do,” Mr Meller added.
AMP 1Y – AMP raises dividend, pledges more cost cuts
Wealth management, AMP’s largest business unit, reported a 16% gain in profit to $183 million, which the company said reflected higher investment-related income from increased customer-account balances, as well as a rebound in cash inflows.
AMP has been hit by profit downgrades in the last two years because of its beleaguered life insurance division, which has suffered from rising claims, high unemployment rates, and clients cancelling their insurance policies.
The group’s insurance business posted operating first-half earnings of $91 million for the half, an improvement from the $64 million last year.
AMP said the “volatile” business environment, claims and lapse experience were “broadly in line with best estimate assumptions”.
“The life insurance sector continues to face both structural and cyclical change and a range of initiatives are underway to address these factors,” AMP said in a statement.
“These include improved customer retention campaigns and additional resources to handle customer claims more effectively and to help income protection customers get back to work more quickly.”
