AMP Banks profits decline, but not as much as expected

Thursday August 20, 2009

AMP Bank has reported its first half profit results with the banks figures showing a drop of one per cent to $362 million from $366 million recorded in the previously corresponding period. The results, covering the six months to 30 June 2009, were no real surprise given the state of the national and global economies during those six months in question.

AMP Bank's underlying profit results also declined 16 percent from the previous period with a result of $367 million. However this is significantly better than figures that were forecasted with that last consensus estimate for an underlying profit being around $275 million. AMP believes that underlying profit is the preferred measure due to the fact it is not affected by market volatility.

Key Performance Measures for the AMP Banks First Half Profit Results for 2009 (1H 09):

• Underlying return on equity 31.6 per cent (as compared to 40.5 per cent 1H 08)
• Underlying profit A$367 million (as compared with A$437 million 1H 08 and A$373 million in 2H 08)
• Net cashflows in AMP Financial Services up 14 per cent to A$865 million
• AMP Capitol Investors external net cashflows at A$192 million (down from A$369 million in 1H 08)
• 63 per cent of AUM met or exceeded benchmark over five years to 30 June 2009
• AMP Financial Services business reported an eight per cent fall in operating earnings to $307 million
  
• Assets under management fell 11 per cent to $89.9 billion
• Operating earnings fell 45 per cent to $43 million

AMP Banks Chief executive Craig Dunn said that while the financial markets are showing signs of improvement, ongoing volatility is inevitable as investor sentiment remains low.

"The short term outlook is starting to look positive. The rally is sustainable (although) it may have gotten ahead of itself.' Mr Dunn told journalists today.

"We're not only facing regulatory change but we can also see significant shifts in consumer behaviour.''

"This result reflects tight cost control, robust net cashflows, improving investment performance, a further strengthening of the group's capital position, along with improved market share in Australian superannuation, retirement incomes and risk insurance,'' he said.

"We will continue with active and prudent capital management to ensure balance sheet strength and flexibility to grow and reshape the business,'' Mr Dunn said.

In his statement, Mr Dunn said it was important for AMP to maintain a strong capital surplus and stated that the banking institution may also look into future takeover opportunities.

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