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Growth stunted this year but sun about to come out: AMP
Email Print Normal font Large font AdvertisementMay 16, 2008

AMP has conceded that upheaval in credit and equities markets will push its profit lower this year, but the wealth management giant sees light on the horizon.

AMP agrees with Australian bank chiefs that the worst of the global credit crunch passed in March when the US Federal Reserve helped rescue investment bank Bear Stearns. Consequently, AMP expects conditions in equities markets to improve at the end of 2008 and continue improving throughout 2009.

"Absolute levels of profit won't be as high this year, the way things look," AMP chairman Peter Mason told the annual meeting in Sydney yesterday.

When market conditions were rosier last year, AMP posted a 10% rise in annual underlying profit to $960 million.

Assets under management (AUM) at its funds management arm, AMP Capital Investors, had risen 5% to $111 billion at the end of 2007. AMP revealed that AUM for the division fell 6% to $104 billion in the first four months of 2008. AUM at superannuation business Contemporary Wealth Management fell 6% to $53 billion after jumping 13% in 2007.

Falling AUM means AMP collects fewer performance and transaction fees. However, 2007 was a big year for AUM growth because it included a one-off, tax-free super investment opportunity that stimulated a rush of inflows.

Chief executive Craig Dunn said the worst of the credit crunch had probably passed, with no more big corporate losses expected, and that AMP was forecasting markets to recover later this year.

"Towards the end of the year we'll start to see a rising trend, which will continue into 2009 as investors start to anticipate improved economic conditions," he said.

While Mr Dunn would not rule out a tilt at St George Bank, he hinted strongly that the Dragon was not in AMP's cross-hairs. "We won't rule anything in or out, but our focus is on organic growth," he said.

AMP also announced it could change its dividend payout ratio from 85% of underlying earnings if markets remained volatile. AMP shares rose 1¢ to $7.86. AAP