AMP's NZ unit sees 1H profit drop on lower Kiwisaver inflows   18 Aug 2016

Thursday 18 August 2016 12:56 PM

AMP's NZ unit sees 1H profit drop on lower Kiwisaver inflows, expects 2H growth

/By Sophie Boot

Aug. 18 (BusinessDesk) - AMP Financial Services New Zealand, the local operation of the Australian fund manager and insurer, said inflows of KiwiSaver funds slowed in the first half of 2016 but it expects a second-half improvement.

New Zealand profit dropped 1.4 percent to A$71 million in the six months to June 30, the Auckland-based company said in a statement. Net cash flow dropped 64 percent to A$73 million for the local unit, with KiwiSaver cash inflows down 5.3 percent to A$282 million in the first half. KiwiSaver assets under management increased 20 percent to A$3.9 billion, making up part of the A$14.5 billion in total assets AMP NZ manages.

AMP is the third-largest KiwiSaver provider with 12 percent of the market, or about 242,000 customers, it said.

The local unit's before-tax operating earnings rose 2 percent to A$62 million in the first half, and its profit margin increased to A$57 million from A$48 million. The lower profit reflects the loss of A$9 million in transitional tax relief which was included in 2015, AMP said, having warned last year the loss could be as much as A$10 million.

Lower KiwiSaver inflows and a reduction in client transfers impacted overall cashflow, with net cashflow down 21 percent to A$121 million in the period, but it expects an improvement in the latter half of the year.

"A pipeline of new superannuation cashflow mandates is expected in the second half of 2016 related to managers choosing not to enter the updated regulatory regime required by the Financial Markets Conduct Act," it said.

The company made more money from its insurance business than expected, with experience profits up 25 percent to A$5 million. Experience profits are made when actual claims fall short of what insurance companies have projected. The individual lapse risk rate improved by 0.6 percentage points to 11.1 percent, and better experience profits "reflected overall improved management of claims, with an increased focus on helping customers return to work, and better lapse experience," AMP said.

AMP's group profit for the first half rose 3 percent to A$523 million, with underlying profit down 10 percent to $513 million, the parent company reported today. The board declared a dividend of 14 Australian cents per share, payable on Oct. 7, with a Sept. 1 record date.

The dual-listed shares fell 4.3 percent to $5.86 on the NZX, and last traded at A$5.79 on the ASX.

(BusinessDesk)

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