AMP reported a 24.5% slump in half-year profit but will throw a $1.1 billion capital return the way of its patient but long-suffering shareholders.
AMP said it would commence a $350 million share buyback immediately.
It will not declare a dividend, but plans another $750 million in capital returns in the next financial year through a special dividend or further share buyback.
“The strength of our balance sheet and capital position has enabled us to announce a return of capital to shareholders of $1.1 billion,” CEO Alexis George said on Thursday.
“We’re pleased to be able to deliver on this commitment to shareholders.”
In April, George promised that most of the cash raised from the sale of its parts of its asset management business Collimate Capital would be would be returned to shareholders.
AMP had no option really – it was the shareholders’ money many of whom had hung around during years of scandals, instability a weak share price and a company that was imploding.
Given the changes AMP has undergone in the past year, the financial results released yesterday were almost immaterial.
Statutory net profit after tax in the six months to June was $481 million, up $146 million from the first six months of last year.
Because this was due to the sale of the company’s infrastructure debt platform and other assets it gives a completely misleading view of AMP’s profitability, as did the underlying net profit after tax of $117 million, which was down 24.5% from $155 million first six months of 2021.
Ms George said AMP had made significant progress simplifying its portfolio to make the company more efficient. However, she acknowledged the challenge of continued rocky economic conditions.
“This first half of the year has seen a challenging economic backdrop. Despite the decline in investment markets, our business is well positioned with a robust balance sheet that will help us to drive forward through a period of continued economic uncertainty,” she said.
“AMP is entering its next era as a significantly simplified group, leading in wealth management and banking.”
AMP Bank remains an solid asset (it tried to sell it off at one stage) and did well in the half even though underlying profit fell to $46 million from $84 million.
AMP Bank’s grew its residential mortgage book grew by $705 million to $22.4 billion while maintaining credit quality.
Like its larger rivals, net interest margin was weaker – 1.32% (down from 1.62% in the 2021 last year).
That reflected competitive rates and customer preference towards lower margin fixed rates loans but AMP, like the Commonwealth said on Wednesday, expects its margin to improve as lending rates rise faster than deposit rates. In fact AMP said its net interest margin improved in the June quarter of the year.
There was also a $12 million write back of a provision in the first half of 2021.
In AMP’s wealth management arm, assets under management fell to $126.3 billion, compared with $142.3 billion at the end of 2021 because of the slide in financial markets up to June 30.
Markets have picked up sharply since then.
AMP shares ended off 0.8% at $1.155.
