AMP sees profit jump, looks to lift advice quality

As AMP attempts to lift the quality of advice and fix issues in its wealth protection division, the financial services giant has seen its half-year net profit climb to $507 million, a 33 per cent increase on the previous corresponding period.

Underlying profit was $570 million, compared with $510 million for the first half of 2014. The wealth manager said that result was driven by strong growth in all contemporary businesses.

At the same time, the board declared a 12 per cent increase in the interim dividend to 14 cents per share compared with 12.5 cents per share for the 2014 interim dividend.

"This is a very good result with contemporary businesses continuing to deliver growth," said AMP chief executive Craig Meller.

"The performance reflects a strong contribution from our core Australian business. The continuing delivery of our strategy to be a more customer driven organisation and our business efficiency program are on track."

Australian adviser numbers remained stable at 3,762.

Despite this performance, the wealth manager said the institution was in a period of considerable change, particularly in its advice arm.

"A package of measures to lift the quality of advice is underway alongside a new approach to advice being piloted with encouraging results from consumer testing in five locations," the wealth manager said.

"AMP continues to invest in service, platforms and digital capability to improve adviser quality and productivity."

In wealth protection, operating earnings were $99 million, up 9 per cent half on half year, reflecting the impact of management actions.

AMP said the environment continues to be volatile. However, claims and lapse outcomes remain in line with best estimate assumptions.

"The wealth protection business continues to stabilise and is delivering improved results; however, we have more to do," Mr Meller said.

For the wealth management division, net cash flows sat at $1.2 billion in 1H 15, which was up
$36 million on net cash flows of $1.1 billion for the same period last year. Total cashflows on AMP platforms grew 11 percent to $1.9 billion for the first half of 2015.

However, AMP said these flows were partially offset by higher net cash outflows of $774 million on external platforms.

While the wealth manager saw its North platform grow 16 per cent to $18.6 billion and customer numbers increase 14 per cent to over 87,000, its cash flows fell 4 per cent to $2.3 billion.

AMP said this was as a result of more pension customers drawing down an income stream.

AMP had $2.3 billion in capital above minimum regulatory requirements at 30 June 2015, up from
$2.0 billion at 31 December 2014. The increase is due to retained profits and the AMP Wholesale Capital Notes issuance, but partially offset by AMP's investment in China Life Pension Company in Q1 2015.

AMP maintains a strong balance sheet, with little change to gearing, and has access to significant liquidity.

"Together with the improvements across our Australian businesses, it is also particularly encouraging to see strong progress from our partnership in China," Mr Meller said.

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