AMP merger pays off as earnings lift in tough year
AMP has reported a solid result for the 2012 calendar year with net profit up 2.3 per cent at $704 million.
Its financial planning, superannuation and self-managed super fund (SMSF) administration businesses performed well.
The completion of integration with AXA, which AMP bought in early 2011, is ahead of schedule. But the results were held back by difficult personal insurance markets.
The financial services group declared a final dividend of 12.5¢ a share, 65 per cent franked. The underlying profit was $955 million, from $909 million in 2011.
"The strong performance of our wealth management business reinforces the benefits of the merger with AXA," AMP chief executive Craig Dunn said.
Since the merger with AXA, planner and adviser numbers have continued to grow. With more than 3600 planners, AMP has the largest adviser network in Australia. Mr Dunn said the success of the North investment platform, which came with its AXA acquisition, has helped to grow market shares in superannuation and retail managed funds.
The merger with AXA is on track to be completed by June 2014, six months ahead of schedule.
AMP is capturing a greater share of the fast-growing SMSF sector, with the number of accounts under administration tripling during 2012.
AMP Capital won significant mandates in 2012 from large institutional investors, including those from Abu Dhabi, Canada and China.
"It's a positive result with better to come," said Peter Warnes, the head of equities research at Morningstar.
He said the business would be helped by improving investment markets. As sharemarkets continue to improve, investors are switching from lower margin cash-style investments to higher-margin equity investments. Profits from insurance through AMP's Wealth Protection division fell significantly to $56 million in the second half of last year, from $107 million in the second half of 2011.
Mr Warnes said that while life insurance results were disappointing it was an industry-wide problem rather than specific to AMP.
Mr Dunn said when family budgets were stretched they cut back or pulled out of life insurance altogether.