SYDNEY: Australia’s oldest wealth manager, AMP Ltd, posted a near nine-fold increase in cash outflows at its wealth management unit in the wake of damaging revelations of misconduct, sending its shares down sharply.
The 170-year-old company was accused of charging fees for no service and attempting to deceive regulators at a government-mandated Royal Commission inquiry last year, which led to the loss of its chairman and chief executive. It has since haemorrhaged billions of dollars in funds and is facing class-action lawsuits.
“Cashflows in Australian wealth management continue to be challenged given the post-Royal Commission environment,” chief executive officer Francesco De Ferrari said in a statement.
The unit logged net cash outflows of A$1.77bil (US$1.2bil) in the quarter to end-March, compared with outflows of A$200mil the same period the prior year, Australia’s largest listed wealth manager said in a statement.
Net cash inflows and outflows are a closely watched performance measure for wealth managers as they show the amount of cash that customers are prepared to entrust in the firm.
The company noted that its assets under management, which includes investment performance, rose 5% “with positive investment markets off-seting weaker cash inflows”.
AMP shares were down 5.2% in morning trading to just above the record lows they hit earlier in 2019. The shares have halved over the past year, while the broader Australian share market has risen, due to a steady flow of bad news stemming from the Royal Commission.
“Last year people were pretty freaked out about what was going on at the Royal Commission, and it’s taken a while for that to flow through,” said Hugh Dive, chief investment officer at Atlas Funds Management.
He said the heavy outflow of funds has hurt AMP’s profit margins, given that funds management is very much a fixed-cost business.At the company’s annual general meeting yesterday, chairman David Murray told shareholders the inquiry had damaged AMP more than other institutions due to its focus on advice and superannuation.
Murray, who took the role at AMP amid the Royal Commission fallout last year, was scheduled to ask shareholders to re-elect him to the role at the meeting. — Reuters
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