AMP, the Australian wealth manager, announced on Wednesday a 32% decline in its full-year net profit, largely attributed to its banking division. Despite this, AMP’s net profit reached 265 million Australian dollars (US$171.1 million) in the 12 months through December, surpassing analysts’ consensus estimate of A$263 million.
Strong Revenue Growth
AMP experienced a significant increase in revenue, reaching A$2.98 million for the full year, a notable 27% rise compared to the previous year.
AMP Bank’s Performance
However, AMP Bank’s underlying net profit after tax for the full year reduced to A$93 million, down from A$103 million in the previous year. This decline was primarily due to net interest margin compression. The bank’s net interest margin (NIM) for the year was recorded at 1.27%, down from 1.38% in the previous year, while AMP had initially projected a NIM of 1.25% for the full year.
Cost Reduction Program
To address the financial challenges, AMP implemented a cost reduction program aiming for a reduction of A$120 million in its cost base by the end of fiscal year 2025. As part of this initiative, the company recorded controllable costs of A$744 million for the full year.
Dividend Declaration
Consequently, directors of the company declared a final dividend of 2.0 Australian cents per share, down from 2.5 Australian cents in the previous year.
In conclusion, AMP faced a decline in net profit primarily due to its banking division’s performance. However, the company demonstrated resilience with strong revenue growth and implemented a cost reduction program to improve its financial standing moving forward.