This morning AMP’s first half net profit plunged 74.2%, from $445 million to $115 million.
This saw AMP [ASX: AMP] shares trading at $3.35 at yesterday’s close, which was a drop of 38.3% in as little as six months.
Impacts of the Royal Banking Commission still affecting AMP’s share price
After the Royal Commission hearing, which skinned the scalps of its chairman, CEO, multiple directors and in-house lawyer, AMP’s total market value has dropped by $4 billion.
Further signs of AMP’s struggles can be seen after its troubled wealth-management division saw cash outflows of $873 million — that’s a 2 million turnaround since the previous year’s inflows of $1.02 billion.
This, along with the share price, could be why customers were pulling their investments out of the company.
Their insurance division has also hit a bump, with profit in wealth protection plunging 98% to just $1 million.
AMP said this is due to higher than expected claims for total and permanent disability insurance, along with additional cost of re-insurance.
Will AMP’s share price stabilise?
AMP’s acting chief executive Mike Wilkins, commented on the impacts being felt after the Royal Commission, saying:
‘The events around the royal commission into financial services have challenged our reputation and, while we continue to monitor the impacts, we have taken action to stabilise the business and move forward.’
‘Headwinds remain for the second half of the year, but focus our focus is clear. We’ll continue to prioritise our customers, putting their interests first.’
To combat this, AMP is cutting fees for 700,000 pension customers, at a cost of $50million a year.
Tough times are ahead for Australia’s biggest financial service company, as the impacts of the commission could keep contributing to this downward spiral of AMP’s volatile share price. Having said that, this doesn’t leave the possibility of a bounce back in share price off the cards.
For Money Morning
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