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AMP profit drops but corporate super holds up
AMP's retail superannuation inflows took a hit in the last quarter of 2008, amounting to less than half of those recorded in the previous corresponding period, while corporate superannuation inflows actually picked up.
The news on the inflows came at the same time as AMP joined the list of financial services companies encountering plummeting profit lines, reporting a 41 per cent drop in net profit attributable to shareholders to $580 million for the year to December 31, 2008.
However, the company has preferred to use its underlying profit figure, which declined 8 per cent to $810 million, arguing that it was AMP's key measure of business profitability because "it smoothes investment market volatility and is the earnings base from which the board's decisions relating to dividends are derived".
Looking at retail superannuation and allocated pensions cash flows, the company said net cash flows were $202 million for the fourth quarter, compared to $425 million in the previous corresponding period, with total retail super and pension annuities inflows falling 40 per cent to $1,424 million.
However, where corporate superannuation was concerned, the picture was better for AMP, with net cash flows well up, mainly due to resilient employer contributions and lower outflows.
Drilling down into its wealth management areas, the company said its so-called Contemporary Wealth Management division, which includes financial planning and superannuation, recorded a 13 per cent decline in operating earnings, largely impacted by a 23 per cent fall in assets under management.
It said Contemporary Wealth Management generated net cash flows of more than $2 billion while AMP Financial Planning continued to grow its planner base, with total planner numbers increasing 3 per cent to 2,095.
Like a number of other companies, AMP's insurance lines continued to perform, with its Contemporary Wealth Protection division reporting a 29 per cent lift in operating earnings.
AMP Capital Investors reported a 9 per cent decline in operating earnings to $136 million.
Despite the result, AMP chief executive Craig Dunn said irrespective of the need for ongoing cost efficiencies, the company remained committed to a strategy of growing distribution, products and services.
He described the result as being sound in a tough year.
AUTHOR
Mike Taylor
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