AMP chief executive Craig Dunn says the wealth manager is better placed than ever to tackle the structural challenges facing the retirement savings industry, with integration efforts from last year's $4 billion buyout of AXA Asia Pacific nearing completion.
Mr Dunn also suggested he was eyeing further expansion into selective Asian markets after gaining ground from existing investments in China and Japan. But any further move in the region would be on a long-term basis.
"Your approach to each (Asian) market has to be different and you have to be very patient. You can waste a lot of money if you move too quickly," he told BusinessDay.
Mr Dunn was speaking as AMP delivered a 7 per cent increase in first-half underlying profit to $491 million. The result came in slightly better than expected and was helped by tight cost control.
AMP rallied more than 4 per cent to a five-month closing high of $4.36 as the result eased a slew of investor concerns about Australia's biggest superannuation manager.
Since the financial crisis, superannuation managers such as AMP have been grappling with households turning their back on volatile stock markets and putting more savings into lower-risk areas such as bank deposits and bonds.
The combination of the AXA businesses was a major contributor to the profit lift, delivering higher fee income and greater cost savings.
"There is no doubt in my mind that the merger means the new AMP, or combined business, is much more competitive and a much stronger business, it can grow more quickly and deliver real value to shareholders," Mr Dunn said yesterday.
But with surplus capital, and the integration of AXA running six months ahead of schedule, the wealth manager was now looking to tap faster-growing areas of the retirement savings industry, such as self-managed superannuation.
"Clearly the GFC has had a very significant impact on markets. I think the biggest change is on how consumers are changing their preferences they're more cautious than they once were and they're looking for greater value and they're more selective."
Despite the profit lift, AMP opted to cut the first-half dividend by 1.5? to 12.5? a share to build a larger capital buffer.
Even with the broader downturn in superannuation savings, Mr Dunn said he was still comfortable with the $2 billion of goodwill related to last year's AXA acquisition. "Since the get-go of the merger, we've continue to meet or exceed our targets."
Frequently Asked Questions about this Article…
What were AMP's first-half results and what drove the 7% profit increase?
AMP reported a 7% rise in first-half underlying profit to $491 million. Management attributed the uplift to tight cost control and stronger contributions following last year’s AXA Asia Pacific acquisition.
How did the AXA Asia Pacific acquisition affect AMP's performance and fees?
The $4 billion buyout of AXA Asia Pacific was a major contributor to AMP’s profit lift, delivering higher fee income and cost savings as the businesses were combined and integrated.
Is AMP looking to expand further into Asian markets?
Yes. AMP’s chief said the group is eyeing selective expansion into Asian markets on a long-term basis, building on existing investments in China and Japan and stressing that each market requires a different, patient approach.
Why did AMP cut its first‑half dividend and what does that mean for investors?
AMP trimmed the first‑half dividend slightly to build a larger capital buffer, prioritising financial strength and flexibility even as profits rose — a move intended to support longer‑term stability for shareholders.
What does AMP’s surplus capital and faster-than-expected AXA integration mean for growth opportunities?
With surplus capital and the AXA integration running about six months ahead of schedule, AMP is looking to tap faster‑growing parts of the retirement savings market — including self‑managed superannuation — which could support future growth.
How did the market react to AMP’s half‑year update?
Investors responded positively: AMP shares rallied more than 4%, closing at a five‑month high of $4.36 as the result helped ease concerns about the company’s prospects.
How have consumer savings preferences changed since the financial crisis and how does that affect AMP?
Since the GFC, households have shifted toward lower‑risk allocations like bank deposits and bonds, becoming more cautious and value‑seeking. AMP acknowledges these structural changes and is adapting its offerings to meet more selective consumer preferences.
Is AMP confident about the goodwill recorded from the AXA deal?
Yes. AMP said it remains comfortable with the roughly $2 billion of goodwill related to the AXA acquisition, noting the combined business has continued to meet or exceed integration targets.
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