The beleaguered wealth manager AMP has slashed its dividend after its full-year profit plummeted 97% to just $28m amid disastrous “reputational damage” from the banking royal commission.
Revenue from ordinary operations slumped 55% to $820m and AMP cut its final dividend from 14.5c to 4.0c.
AMP, which made a profit of $848m a year earlier, recorded $656m in customer remediation largely related to misconduct aired at the financial services royal commission.
In a woeful year for the venerable company, revelations at the commission hearings that AMP had charged fees for no service forced the resignation of chief executive Craig Meller along with the chair Catherine Brenner. The fallout saw $2.2bn wiped off the company’s market value.
“The royal commission has been a confronting but valuable experience for the financial services industry and has served as a catalyst for change at AMP,” new chief executive Francesco De Ferrari told analysts on Thursday.
“We have undertaken board and leadership renewal, accelerated client remediation and sharpened our focus on delivering better value to customers.”
De Ferrari, who took over the top job in December, said he believed the public still harboured “goodwill toward the AMP brand” and that the company could regain consumer trust.
In a statement to the ASX, the firm admited that it had been hurt by the “reputational impact of the royal commission”, which meant that staff had to work to retain clients rather than sign up new accounts amid an exodus of customers.
AMP said customers had pulled $4bn from its wealth management division in 2018, with earnings from the unit falling 7%. Net cash outflow from Australian wealth management was $931m in the previous year.
The company was “committed to making the changes that are required to transform the business and reposition it to deliver significantly better performance and value over the long term”.