Kiwisaver boosts AMP bottom line
AMP Financial Services New Zealand had a 20 per cent rise in net profit for the half-year to June 30 on the back of significant growth in KiwiSaver funds.
The Australian-owned financial services giant had a A$55 million (NZ$61m) profit after tax, up from A$46m in the same period last year.
Operating profit was NZ$59.4m, a 5 per cent increase compared with the previous corresponding period.
The company said the improved underlying profit was driven by cost reductions and an increase in assets under management.
Assets under management grew by 6 per cent to NZ$13.5 billion, up from NZ$12.7b in the first half of last year, helped by a 22 per cent growth in KiwiSaver funds.
KiwiSaver cashflows increased by 83 per cent to $157m, up from $71m in the previous corresponding period. AMP New Zealand managing director Jack Regan said the increase was driven partly by higher compulsory employer KiwiSaver contributions.
"The first half of 2014 represents a full six months of cashflows at the new 3 per cent minimum rates for employer and employee contributions and saw funds under management exceed the $3b mark for the first time," he said.
Life insurance annual premium income was flat over the half-year, which AMP said was consistent with much of the industry as rising insurance costs were dampening consumer demand.
AMP Financial Services represents the New Zealand division of the AMP group, but excludes sister company AMP Capital.
The overall AMP group, which is dual-listed on the NZX, reported that its first-half net profit dipped 3 per cent to A$382m.
Group operating profit, which excludes one-off costs, rose 16 per cent to A$510m from A$440m in the previous corresponding period.
The company declared an interim dividend of A12.5 cents a share, up from an interim dividend of A11.5c last year.
Regan said the New Zealand business had delivered a strong start to the year in a challenging market.
New Zealand consumers had plenty of choice in the financial services market and were becoming increasingly conscious of insurance premium increases , he said.
The industry was facing regulatory costs such as the continuing impact of the Financial Markets Conduct Act.
"In these conditions, it is vital that we contain our own costs so that we can remain competitive by passing on as little of these costs to our customers as possible," he said.
AMP reported that its controllable costs had fallen to $45m for the half-year, down from $53m in the first half of last year.
Cost savings had been achieved by the streamlining of duplicate wealth management products, including last year's merger of the AMP and former AXA KiwiSaver schemes and from reduced employment costs.
AMP said it was examining further rationalisation of wealth management products that would lead to reduced information technology costs.