AMP chief executive Craig Meller says uncertainty generated by proposed changes to superannuation contributed to a 10 per cent decline in the wealth manager's first-half underlying profit.
Net profit in the six months to June 30 rose 3.2 per cent to $523 million but underlying profit - the company's preferred measure of performance - dropped to $513 million from $570 million in the prior corresponding period.
AMP Bank, AMP Capital and New Zealand Financial services all showed an increase in profit compared to the first half of 2015, but profit from Australian wealth protection fell by more than 50 per cent due to higher insurance claims and net cashflows in Australian wealth management dropped from $1.152 billion to $582 million.
"All of the noise around superannuation, the continued tampering with the system, the concern people have that superannuation might not be there for the long term, does inhibit people's desire to put their savings into super - and it's just too hard to predict at the moment whether the second half of the year will see confidence recover," Mr Meller said.
The result fell short of analyst expectations - with Deutsche expecting underlying profit of $525 million - and AMP shares fell 27 cents, or 4.7 per cent, to $5.52.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
Mr Meller said investors had become more risk-averse in the first three months of the year - a volatile period during which the Australian share market dropped more than 10 per cent.
"By April, we started to see some recovery as markets started to recover and then, with the budget announcement and the announcement of the election, we saw relative to the prior year a significant drop off in discretionary contributions into superannuation," Mr Meller said.
In May's budget, the federal government flagged changes including cutting the concessional super cap to $25,000 a year, introducing a new lifetime cap of $500,000 for non-concessional contributions, and introducing a $1.6 million cap on the total amount in pension phase funds.
Profit from Australian wealth protection - which covers life, disability and income protection insurance - dropped from $99 million in the prior corresponding period to $47 million.
"To address performance in the insurance business, AMP is strengthening income protection assumptions, repricing, continuing the transformation of claims management and accelerating our capital management initiatives," Mr Meller said.
AMP'S CHALLENGING FIRST HALF
* Net profit up 3.2pct to $523m
* Underlying profit down 10pct to $513m
* Interim dividend steady at 14 cents, 90 per cent franked
