AMP profit down 41 per cent

AMP has joined the list of financial services companies encountering plummeting profit lines, reporting a 41 per cent drop in net profit attributable to shareholders to $580 million for the year to December 31, 2008.

However, the company has preferred to use its underlying profit figure, which declined 8 per cent to $810 million, arguing that it was AMP’s key measure of business profitability because “it smoothes investment market volatility and is the earnings base from which the board’s decisions relating to dividends are derived”.

The AMP directors have however decided to reward investors with a final dividend of 16 cents a share.

Drilling down into its wealth management areas, the company said its so-called Contemporary Wealth Management division, which includes financial planning and superannuation, recorded a 13 per cent decline in operating earnings, largely impacted by a 23 per cent fall in assets under management.

It said Contemporary Wealth Management generated net cash flows of more than $2 billion while AMP Financial Planning continued to grow its planner base, with total planner numbers increasing 3 per cent to 2,095.

Like a number of other companies, AMP’s insurance lines continued to perform, with its Contemporary Wealth Protection division reporting a 29 per cent lift in operating earnings.

AMP Capital Investors reported a 9 per cent decline in operating earnings to $136 million.

Despite the result, AMP chief executive Craig Dunn said irrespective of the need for ongoing cost efficiencies, the company remained committed to a strategy of growing distribution, products and services.

He described the result as being sound in a tough year.