AMP Wealth suffers setback on hefty losses in advice

AMP reported a net loss of $252 million on Thursday (10 February), compared to a $177 million profit a year earlier, while its underlying net profit after tax increased 52.8 per cent to $356 million on the back of strong results by AMP Bank.

Australian Wealth Management (AWM) total assets under management (AUM) increased 8 per cent to $134 billion on the back of improved investment markets and a reduction in net cash outflows.

AWM’s underlying net profit after tax was $48 million, down from $64 million a year earlier, on the back of hefty losses in advice as it continued its transformation.

Namely, the underlying full-year loss of AWM’s advice division stood at $146 million, driven by a decline in revenue due to the cessation of grandfathered renumeration and an advice network reshape.

Advice revenue of $58 million was $57 million lower than in 2020, largely attributable to impairments to the carrying value of practice investments, AMP said.

Looking forward, AMP noted that the underlying full-year loss in advice is expected to improve by 50 per cent in full year 2022, reflecting the exit of employed advice, right-sizing network support costs and improving revenues.

Outside of AWM, AMP Bank reported an underlying net profit after tax of $153 million, signifying growth of 38 per cent, while AMP Capital saw its profit rise 18 per cent to $154 million.

“We have set a clear strategy to drive two simpler and more efficient businesses, well placed to compete, grow and deliver value in a highly dynamic market,” said AMP chief executive Alexis George.

“We’ve achieved a solid underlying profit result, which shows the strength of our Bank, growth of the North platform with increased inflows from external financial advisers, and the significant cost savings achieved from across the business, in line with our targets.

“We have good momentum in the transformation of AMP, repositioning our core capabilities to take advantage of the opportunities ahead of us, as we progress towards and beyond demerger as a simpler and purpose-led business.”