Earnings up 80% for AMP

By RICHARD BRADDELL

AMP Financial Services in New Zealand has reported an 80 per cent jump in first-half net profit to $26.5 million.

The result, for the period ending June 30, was reported at the same time as the global group reported a $A525 million ($690 million) profit, reversing the previous first-half $A398 million loss and putting an end to losses from its disastrous takeover of Australian insurer GIO.

The New Zealand result, which excludes returns from general insurance, asset management and banking (these are consolidated directly to the global accounts), fared unduly well in comparison with the previous year because of one-off project and Y2K costs in that period, said John Drabble, the general manager of New Zealand financial services.

Another round of growth-oriented investment made it likely the second-half profit would be more in keeping with 1999's first half, although the full year would still be ahead of 1999's $35 million.

Mr Drabble said the first half had been characterised by sluggish markets, but even in areas where there had been no growth, AMP had maintained its market share.

Overall, sales were up 3.3 per cent.

In retail superannuation, AMP had taken its market share from 9 to 12 per cent.

Over 12 months, New Zealand funds under management had grown by $1 billion to $10 billion, with AMP Asset Management's Winz fund attracting $700 million in new funds in the past six months.

Although demand for home loans was subdued, AMP Banking maintained its 6 to 7 per cent market share on new loans, with the loan book rising to $2.5 billion as customer numbers over six months climbed by 4000 to 35,000.

In March, AMP's private capital investment fund raised more than double its targeted $25 million. It made its first investment, in a telephone technology firm, last month.

Speaking on the group result, chief executive Paul Batchelor said Australia and New Zealand had cut costs 10 per cent, while British costs had gone down 5 per cent.

The good news from GIO was that budgeted integration savings of $A140 million had been achieved a year early, with a target of $A200 million by the end of 2001.

This year's return on equity of 13 per cent was close to Mr Batchelor's short-term target of 15 per cent, which he said he aimed to exceed once it was achieved.

The "conservative" result contained no abnormals or unusual one-off factors, he said.

Chief financial officer Marc de Cure said AMP had reduced its dependence on volatile investment income, with a much higher proportion of ongoing operating earnings providing more stability.

AMP's 116,000 New Zealand shareholders will receive an interim dividend of A23c (30c) a share.