AMP “Reset” Not Enough To Stem Investor Exodus

By Glenn Dyer | More Articles by Glenn Dyer

As expected 2019 turned out to be a miserable year for AMP – and it was all the company’s own doing.

The fallen wealth management giant yesterday posted a $2.5 billion full-year loss and scrapped its final dividend after a rough year that saw clients abandon its troubled wealth management arm, forcing it to launch a $650 million capital raising to offset massive write-downs in the value of the business.

Barring one-off costs, AMP’s underlying profit fell 32% to $464 million in the year to December.

Earnings from wealth management halved to $182 million, while AMP Bank’s profits dropped by 4.7% to $141 million.

Total assets under management fell by $14 billion to $272 billion at December 31 thanks to the outflow of billions of dollars by worried investors taking their money and running.

The $2.5 billion net loss came on the back of hefty charges the company took in the June half to write down the value of its troubled wealth management arm and AMP Life.

To stablise the balance sheet, the company has decided not to pay a final dividend for FY19 on top of the decision to scrap the interim.

But while shareholders go without, CEO Francesco De Ferrari has been granted a 66% boost to his potential short term bonus.

Investors didn’t like the figures or the commentary from management and marked the shares down 4% to $1.75.

CEO Francesco De Ferrari described 2019 as a “year of fundamental reset” for the business and pointed to the gains made by AMP Capital that saw operating earnings increase by 19% to $198 million.

AMP said it was on track to complete client compensation payouts for inappropriate financial advice and fees for no service by 2021, with $190 million paid in the last six months.

“As promised, we have prioritised client remediation and made significant progress,” Mr. De Ferrari said.

“We have agreed the main outstanding areas of our program with ASIC, including for advisers who are no longer active in our network. We remain committed to putting it right for impacted clients as quickly as possible,” AMP’s CEO said

AMP said it will boost the maximum short-term bonus Mr. De Ferrari can earn to 200% of his base salary, from 120% previously, effective from this year.

The bonus is dependent on the CEO exceeding all his performance targets.

Asked about the timing of the announcement, he told the media that “my remuneration is a matter for the board”.

But it is not a good look for a company that has a massive image problem with shareholders taking the hit from the trashed share price and no dividend.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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