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Wealth manager takes massive profit hit

A global pandemic and subsequent market volatility have hit wealth manager AMP, taking a near 50% profit hit compared to the same period last year.

AMP provided an update on its 2020 interim operating earnings to the ASX, citing the impact from market volatility and economic disruption due to COVID-19.

The wealth manager reported an underlying profit for all businesses, including Australian wealth management, AMP Bank, AMP Capital and New Zealand wealth management, of $140-150 million.

For the same corresponding period last year, AMP posted an underlying profit around the $300 million mark.

The company noted the results are still being finalised and subject to an audit review.

AMP said the results have been impacted by a range of factors, including market volatility and a credit loss provision in AMP Bank.

"AMP has prioritised servicing clients throughout this period, including temporarily increasing resources, as well as maintaining business resilience, which has resulted in additional costs," it said.

"The pandemic has also impacted the pace of investment spend, including the cost reduction program, though AMP remains committed to delivering $300 million of annual run-rate cost savings and its transformational investment of $1-1.3 billion."

AMP said, despite the challenging circumstances, it has successfully completed its sale of AMP Life, which has served to simplify the portfolio.

It said this has helped free up capital and deliver a foundational element if it's transformational strategy.

AMP added its remediation program remains on track and is expected to be 80% complete by the end of FY20.

"AMP has taken decisive action to support clients and employees and maintain a strong a resilient business, as COVID-19 continues to impact investment markets and the broader economy," AMP chief executive Francesco De Ferrari said.

"Our strong capital position and liquidity have positioned us well to respond, though our first half results have been impacted by the market volatility."

De Ferrari added that despite issues arising from the pandemic, he was pleased with the results AMP was able to provide.

"The pandemic has presented many challenges but has not distracted us from our mission to transform AMP into a simpler, client-led, growth orientated business," De Ferrari said.

"In the first half, we have made significant progress in delivering our strategy including completing the highly complex sale of AMP Life which simplifies our portfolio and sets us up well for the future."

Read our full COVID-19 news coverage and analysis here.

Read more: Francesco De FerrariAMP CapitalASX
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