AMP first-half profit up 22pc

AMP, Australia's largest life insurer, said first-half profit gained 22 per cent as rising stock markets boosted sales of mutual funds and pension plans.

Net income rose to A$393 million ($426.5 million), or 21Ac a share, in the six months to June 30, from A$321 million, or 17Ac, a year earlier, AMP said yesterday. The result beat analysts' estimates. Assets under management rose 7 per cent.

Chief executive Andrew Mohl said AMP has a bigger sales force than competitors, giving it an advantage in tapping A$710 billion of retirement savings. He said that figure may grow 10 per cent a year in the next decade. AMP's A$84 billion in funds under management lags only the A$123 billion at Commonwealth Bank of Australia.

"They seem to have done quite well, with the value of new business coming in above expectations," said Peter Vann at Constellation Capital Management in Sydney.

Mohl, 49, said more capital would be returned to shareholders in the first half of 2006 after the company returned 40Ac a share, or A$746 million, to investors in June.

AMP shares rose 26Ac to A$7.28.

Operating profit, which is before investment income and one-time items, rose 21 per cent to A$297 million on higher sales and increased fees, and as costs fell 4 per cent to A$381 million.

Mohl forecast operating profit at the company's financial services and asset management businesses would rise by at least 15 per cent in the full year.

Mohl said 83 per cent of AMP's Australian funds under management met or exceeded industry benchmarks in the half.

AMP will pay a first-half dividend of 14Ac a share, up from 13Ac a year earlier.

AMP has 1552 financial planners, ahead of National Australia Bank, which has 1346 and Commonwealth Bank with 1022 at June 30.

That gives AMP a "strong competitive advantage" as retirement savings in Australia grow by more than 10 per cent a year in the next decade, Mohl said. Australian employers must contribute 9 per cent of workers' wages into pension products.

- BLOOMBERG