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AMP expects A$290M provision in H1 results

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AMP expects A$290M provision in H1 results

AMP Ltd. expects to book provisions amounting to A$290 million for the first half ended June 30 as it moves to regain its reputation following acts of misconduct heard during the Australian banking royal commission.

The company said the provision is for potential advice remediation for financial advice given to customers from July 1, 2008 to Jan. 1, 2009. AMP had faced regulatory scrutiny for misconducts of its financial planners and for charging customers advice not given to them.

The company also expects to book A$55 million in one-off costs for the first half in relation to the royal commission, portfolio review and the remediation program. It said the program is expected to cost about A$50 million per year in the next three years.

AMP will also invest to enhance its risk management controls and compliance systems, resulting in about A$35 million per annum of one-off costs in the next two years. The costs will be reported below underlying profit.

Underlying profit for the first half is expected to be in the range of A$490 to A$500 million. The company reported A$533 million in underlying profit in the prior-year period.

Further, the company will cut fees for its flagship investment products, beginning in the third quarter. The reduction will not have an impact on first-half results, but may lower Australian wealth management investment-related revenue by A$12 million in the second half, and by an annualized A$50 million from fiscal 2019.

AMP is targeting a dividend payout at the lower end of its 70% to 90% guidance range for fiscal 2018.