AMP Limited [ASX:AMP] released its first half results for the 2018 financial year this morning, in which AMP’s net profit plummeted 74.2%, from $445 million to $115 million.
It’s no surprise following the fee-for-no-service scandal that AMP’s share price has taken a hit, dropping 37.84% of its value in the past five months. Although, the wealth management firm’s share value has risen 2.39% since opening this morning.
AMP’s first half results suffer due to royal commission scandal
The recent royal commission scandal, which saw AMP charge customers fees for services they were not, and could not be receiving, has led to AMP losing $4 billion of its market value.
Subsequently AMP’s first half results reflect the company’s compensation and legal costs related to the issue.
AMP’s insurance division is also struggling as a result, profit in wealth protection plunged 98%, which AMP said was due to higher than expected claims that and the cost the insurance insurers buy to protect themselves.
AMP Acting Chief Executive, Mike Wilkins believes that the company’s results have shown its resilience through a difficult period.
‘The events around the Royal Commission into financial services have challenged our reputation, and while we continue to monitor the impacts, we have taken action to stabilise the business and move forward.’
Will AMP earn back the trust of Australia?
AMP is on track to at least achieve financial year 2018 cost guidance, with a dividend payout at the lower end of it 70–90% guidance range.
As previously stated in an earlier update by the company, AMP is investing approximately $70 million over the next two years to further strengthen risk management and controls across the business.
Mr Wilkins commented on the future of the business, saying:
‘Headwinds remain for the second half of the year, but our focus is clear. We’ll continue to prioritise our customers, putting their interests first. We’ll progress the transformation of our advice business, strengthen risk management and accelerate the portfolio review aiming to release further capital from our manage for value businesses.
‘We’re driving change right across the business and are dedicated to delivering the services that are critical to our customers and the Australian economy, helping to earn back trust in AMP.’
This slight increase in share price this morning could suggest that investors are regaining confidence in the wealth management firm.
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