AMP says expects to return more excess capital in 2006

SYDNEY - Financial services group AMP Ltd today said it expected to be in a position to return more excess capital to shareholders in 2006.

AMP also said it was well positioned to build on its 2004 result this year.

AMP said it expected its underlying return on equity to rise strongly in 2005.

In the company's annual report released today, AMP chairman Peter Willcox said the outlook for the business remained favourable, given fair markets.

"At current levels, with the business continuing to perform strongly, we should be in a position to return more excess capital to shareholders in 2006," he said.

AMP plans to return A$750 million ($824 million) or 40 cents per share to shareholders in June this year, and will also reduce some of its debt by returning A$265 million to debtholders as it redeems its income securities.

The superannuation, wealth and funds management group posted a A$934 million net profit for 2004 -- its first full year net profit in three years -- mostly thanks to booming sharemarkets.

The result compared to the previous year's bottom line loss of A$5.54 billion, due to billions of dollars in writedowns as AMP split from its British business, HHG.

In the annual report, AMP chief executive officer Andrew Mohl said the group was well positioned to build on the encouraging results of 2004.

"We operate in an attractive, high growth market -- the retirement savings market -- which has projected longer term growth rates well above the economy as a whole," he said.

"We have strong positions in the fastest growing segments of this market.

"There is no doubt that this is a very competitive market and we face some challenges in 2005."

Mr Mohl said AMP Financial Services operating margins would need to grow through the loss mid-year of transitional tax relief that had been in place since July 2000.

"We are confident of the business' ability to continue to grow operating margins this year, albeit at a more moderate pace than in 2004," he said.

"These challenges will not impact on AFS's value measures -- the value of new business (VNB) and embedded value (EV) -- and we expect to grow strongly in 2005, given fair markets."

He added that AMP also expected solid growth in AMP Capital Investors' operating margins in 2005.

"Cobalt/Gordian will continue its focus on achieving a rapid reduction in its book and is expected to begin to release capital to the group office," Mr Mohl said.

Initially, that would be in the form of the cancellation of existing loans to the parent (which totalled A$237 million in 2004).

"With improved capital efficiencies and higher operating margins, we expect underlying return on equity to rise strongly in 2005," Mr Mohl said.

AMP shares were 11 cents higher at A$7.12 at 1315 AEST (1415 NZT).

- AAP