AMP chief executive Craig Dunn is adamant the wealth manager is on track for growth despite suffering an 11 per cent slump in full year profit.
AMP on Thursday reported a fall in net profit to $688 million for the year to December 31, 2011, from $755 million in 2010.
The result was hit by the cost of AMP’s merger with financial services group AXA Asia Pacific Holdings in March 2011.
AMP’s underlying profit, the company’s preferred measure as it smooths investment market volatility, rose to $909 million from $760 million.
Mr Dunn said while challenging market conditions were impacting on AMP, the company was in a good position to deliver on its growth strategy while keeping an eye on costs.
“Despite the challenging environment, the merged AMP is in a powerful competitive position to deliver on its growth strategy and achieve better outcomes for customers,” he said in a statement.
“The increased scale of the merged business will also allow us to achieve new cost efficiencies.”
Mr Dunn said the integration of the AXA business was going well, with $55 million worth of synergies achieved by December 31, well above AMP’s original estimate of $30 million.
“We’ve made significant progress in the first nine months hitting all our key targets and maintaining business stability, including retaining 96 per cent of the value of the AXA and Charter financial advice network,” he said.
AMP said it remained strongly capitalised, with $1.54 billion capital above minimum regulatory requirements by the end of 2011, compared to $1.48 billion a year earlier.
Its financial services business’ net cash outflows were $581 million for the year, down from net cash inflows of $789 million in 2010.
AMP Capital’s external net cash outflows were $1.166 billion, down from net cash inflows of $2.618 billion.
Meanwhile, AMP reduced its dividend target payout ratio to between 70 and 80 per cent from 75-85 per cent.
The news disappointed shareholders, who pushed the stock down 10 cents, or 2.3 per cent, to $4.29.
“This reflects expected increased capital requirements to meet future business growth following the merger with AXA, increasing demand for more capital intensive products and an anticipated increase in regulatory capital requirements, and could be a disappointment to the market today,” Morningstar analyst David Walker said.
AMP shareholders will receive a final dividend of 14 cents a share, partly franked, a cent lower than in 2010.
