The AMP Limited (ASX: AMP) share price will be on watch on Friday after the release of its profit guidance for the first half of FY 2020.
What did AMP announce?
Although its results are still being finalised and remain subject to audit review, at this point AMP expects to report underlying profit for retained businesses in the order of $140 million to $150 million.
AMP’s retained businesses include its Australian wealth management, AMP Bank, AMP Capital, and New Zealand wealth management businesses.
According to the release, the company’s results have been impacted by a range of factors including market volatility and a credit loss provision in AMP Bank.
AMP advised that it has also prioritised servicing clients throughout this period. This includes temporarily increasing resources, as well as maintaining business resilience, which has resulted in additional costs.
Also weighing on its performance has been the impact of the pandemic on the pace of investment spend. This includes its cost reduction program.
Nevertheless, management advised that it remains committed to delivering $300 million of annual run-rate cost savings and its transformation investment of $1 billion to $1.3 billion.
The company also provided an update on its remediation program. It remains on track and is expected to be 80% complete by the end of FY 2020.
“A strong and resilient business.”
AMP’s Chief Executive, Francesco De Ferrari, commented: “AMP has taken decisive action to support clients and employees and maintain a strong and resilient business, as COVID-19 continues to impact investment markets and the broader economy.”
Mr De Ferrari appears cautiously optimistic on the future.
He explained: “Our strong capital position and liquidity have positioned us well to respond, though our first half results have been impacted by the market volatility. 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.”
“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,” he concluded.