Meanwhile it was a glum message for shareholders in AMP Ltd at the AGM in Sydney yesterday.
This year’s going to be a bit of a struggle with short term growth hard after the volatile investment markets cut assets under management (AUM) by 6% in the first four months of calendar 2008. (It was 5.4% for the CBA in the March quarter alone.)
And the size of the dividend could be threatened if the company continues to do it tough.
The wholesale and retail funds manager said the current market slowdown had reduced the value of its AUM and at the end of April. AUM in the AMP Capital Investors business and the group’s Contemporary Wealth Management arm had both fallen by 6% from the end of 2007 to $104 billion and $53 billion, respectively.
"In AMP Capital Investors, performance fees and transaction fees were also lower in the first four months of this year compared to the same period in 2007," CEO Craig Dunn told shareholders at AGM.
He said that in (the) difficult market environment, delivering growth in the short term would be challenging.
Mr Dunn told shareholders that the AMP’s first quarter cash flows had been affected by tougher market conditions and there had been a real slowing in discretionary savings in superannuation.
"We expect cash flows in 2008 for both the industry and AMP to come off some way from the record flows experienced last year in both retail and wholesale markets," he said.
"This market slowdown has also reduced the value of our assets under management. At the end of April this year assets under management in AMP Capital Investors and our Contemporary Wealth Management business had both fallen by 6 per cent from the end of 2007, to $104 billion and $53 billion respectively.
"In AMP Capital Investors, performance fees and transaction fees were also lower in the first four months of this year compared to the same period in 2007."
That sounds like the AMP is heading for a poor first half, unless there’s a sudden improvement over the next six weeks, to the end of June.
So it was no wonder perhaps that Chairman, Peter Mason warmed the audience up for a possible cut in dividend.
He told the meeting the economic situation for the rest of 2008 remains uncertain.
"This is a more challenging environment for wealth management companies than we have experienced in a number of years," Mr Mason told shareholders, according to the text of the speech released to the ASX.
"But AMP’s financial strength is standing us in good stead in these conditions. We will protect that strength by taking a prudent approach to managing the business in the current environment."
He said the Board understood the importance of dividend payments to AMP’s investor base, particularly its retail shareholders.
"While our policy is to pay out 85 per cent of underlying earnings as dividend, this has been varied in the past and can be in the future to see through the impacts of short-term market volatility
"As an indication of our confidence in AMP’s future, your board declared a final 2007 dividend of 24 cents a share, bringing the total 2007 dividend to 46 cents a share, up 15 per cent on 2006.
"Your board understands the importance of AMP’s dividend payments to our investor base, particularly our retail shareholders, and we continue to frame our dividend policy with that firmly in mind.
"When we set our dividend, we take into account a number of key considerations. These include the underlying earnings of the company for the period in question and the sustainability of those earnings in future years. This allows for the impact that cyclical rather than structural market conditions may have on our results.
"While our policy is to pay out 85 per cent of underlying earnings as dividend, this has been varied in the past and can be in the future to see through the impacts of short-term market volatility.
"We will continue to apply the same prudent and disciplined approach to our dividend policy as we have to our capital management," Mr Mason said.
AMP shareholders have been warned.
AMP shares rose 1c to $7.86 yesterday after being up 12 cents at one stage. Another example where some late consideration tempered earlier optimism.
