Top Stories
Top Stories

UPDATE 1-Australia's AMP Q1 cash outflows surge post damaging Royal Commission inquiry

Commission inquiry@ (Adds details on quarter, outlook)

May 2 (Reuters) - AMP Ltd posted a near nine-fold increase in cash outflows at its wealth management unit on Thursday, as it still reels from the damaging revelations of misconduct in an inquiry into the country's financial sector.

The 170-year-old company has been embroiled in accusations of deception at the government-mandated sector inquiry. It subsequently lost its chairman and chief executive officer, haemorrhaged billions of dollars in funds and is defending itself against class action lawsuits.

"Cashflows in Australian wealth management continue to be challenged given the post-Royal Commission environment," said Chief Executive Officer Francesco De Ferrari.

The unit logged net cash outflows of A$1.77 billion ($1.24 billion) in the quarter ended March 31, compared with outflows of A$200 million last year, Australia's largest listed wealth manager said in a statement.

The wealth management arm's assets under management was A$129.33 billion at March 31, up slightly from A$123.22 billion logged at the end of 2018.

AMP had flagged outflows of about A$3.97 billion for its wealth management unit in 2018. Costs related to remediating customers for misconduct and losses from divestitures wiped off nearly 97 percent of its annual profit.

In a crucial annual general meeting later in the day, AMP's efforts to rekindle investor interest will likely be tested, where shareholders will vote on issues such as executive pay and the appointment of new directors.

Shareholders can call for its board to be dismissed if more than a quarter of them vote against pay plans for a second year in a row, but AMP is likely to be spared such a disruption as large institutional investors say they will vote in favour.

($1 = 1.4263 Australian dollars) (Reporting by Ambar Warrick and Rashmi Ashok in Bengaluru; Editing by Shounak Dasgupta and Himani Sarkar)