AMP has come back from the brink of 2016 losses by revealing a 11% rise in full-year underlying profit for the 12 months to the end of December 2017.
But it said it still has the tough calls to make on the future of its black hole – its wealth protection business.
Thanks to strong earnings in AMP Bank and AMP Capital, AMP told shareholders final dividend would be 14.5 cents a share, up from 14 cents a share, making a total for the year of 29 cents, up one cent from the year before.
The shares rose 3.8% to $5.21. The shares are up less than 0.4% in the past year and 1% year to date, so yesterday’s gain was a big help. AMP reported underlying earnings of $1.04 billion for the year ended December 31 2017, up from $486 million last year. The billion dollar figures attracted support from analysts and investors.
At the same time the wealth management giant posted a net profit of $848 million, agains a net loss of $415 million for 2016 after AMP booked $485 million in capitalised losses from an operational “reset” (in other words, cleaning up the books and trying to account for all losses, actual and potential).
AMP confirmed that it was still reviewing the future of the its wealth protection business (and especially the very troubled income protection component) telling the market “all alternatives were being considered” and that it was in discussions with a number of parties.
In August last year AMP confirmed two new reinsurance (one with Warren Buffet’’s Berkshire Hathaway insurance arm) deals that released $500 million in capital from its recovering wealth protection arm.
AMP CEO Craig Meller said the result showed “the strong headway” the company was making on its recovery. “We’ve stabilised and reinsured our life insurance business and we’ve stepped up our international growth, particularly in AMP Capital,” he said in Thursday’s earnings statement.
Group revenue for the 12 months to December 31 leapt 24% to $18.4 billion, from $14.8 billion a year ago.
AMP Capital and AMP Bank delivered the strongest earnings growth among the six divisions, up 8.3% and 16.7%, respectively, but the Australian wealth management segment contributed the most, despite growth slowing on the previous year.
Mr Meller also said AMP had achieved double-digit growth in AMP Bank’s operating earnings while responding to tightening market regulation. "We remain on track to double the value of the bank by full year 2021," he added.
