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AMP Limited (AMP) reported 27% rise in net profit to $739 million for the full year to 31 December 2009 versus the previous corresponding period. The insurer said underlying profit declined 5% to $772 million in the same period, with momentum improving in the second half.

CEO, Craig Dunn, said the result reflected good earnings diversity, tight cost control, resilient net cashflows and early signs of success from the AMP’s continued investment in growth initiatives. 

“We’re on track with major change programs as we reshape the business for ongoing success,” Mr Dunn said.

”We are committed to staying ahead of evolving consumer preferences and changes in the regulatory landscape.”

The company declared a final dividend of 16c per share, 50% franked, with the unfranked amount being declared conduit foreign income.

AMP said gearing remained low at 13% on an S&P basis, while underlying interest cover is high at 11.9 times.

Mr Dunn said that although Australia’s economic fundamentals are improving, continued global economic uncertainty may mean investment markets remain volatile.

“Over the medium to long term, however, the fundamentals of the wealth management sector remain very attractive in our core markets,” Mr Dunn said.

He added that the company would continue its investment in key growth initiatives given this favourable long term backdrop, and as a result Financial Services costs for 2010 are expected to be 4% - 5% higher, while Capital costs would be tightly managed reflecting market conditions.

“Industry consolidation also gathered pace in 2009 and we expect the shape of the competitive landscape to continue to shift,” Mr Dunn said.

“AXA remains strategically attractive to us. We are continuing to consider our position and will do what is in the best interests of shareholders.”

AMP said operating earnings in Financial Services were up 2% to $647 million on full year 2008, while total net cashflows rose 17% to $1.7 billion.

In Contemporary Wealth Management operating earnings rose 5% to $278 million, with AMP bank contributing $35 million to CWM operating earnings, up from $21 million in full year 2008.

Meanwhile, operating earnings grew 7% in Contemporary Wealth Protection to $164 million compared to $154 million in full year 2008, due to strong growth in business volumes.

However, operating earnings dropped 33% to $91 million in Capital Investors due to a 20% fall in fee income.

“AUM based management fees fell 10% to $284 million in full year 2009, reflecting a nine per cent fall in average AUM year on year, resulting from difficult investment markets in 2008 and early 2009,” the company said.

“External management fees fell 16% while internal management fees fell 7%.”

AMP said that with the exception of property, direct investments and alternative assets, all asset classes delivered positive investment returns for the year.

At the close of trade Wednesday, AMP shares were trading at $6.27.

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