AMP has posted a 41% fall in annual net profit and says it is continuing to manage its costs as it prepares for ongoing volatility in financial markets in calendar 2009.
AMP's net profit for the 2008 year was $580 million, down from $985 million in the previous 12 months.
Its net profit before accounting mismatches was $423 million, down 60%.
The company's stock gained 13 cents, or 2.6%, to $5.05 for the day.
The insurer and wealth manager's underlying profit - which smooths out investment market volatility impacts - was $810 million, a decline of 8%.
The difference between the statutory and underlying profits mainly reflected an investment income market adjustment loss of $260 million.
AMP chief executive Craig Dunn said today the company had reported a sound result in a tough year.
"AMP remains a strong, well capitalised and resilient company with a disciplined and prudent approach to executing our strategy in these markets," he said in a statement.
During the year ended December 31, AMP's cost to income ratio rose to 41.3%, from 39.7%.
AMP's total operating earnings fell 4% to $737 million.
Operating earnings for its contemporary wealth management business, which comprises financial planning, superannuation and banking, fell 13% to $266 million, after assets under management (AUM) dropped 23% due as equity markets slumped.
"Despite the current very difficult operating climate, we remain confident about the medium to long term outlook for the wealth management sector," Mr Dunn said.
"We continue to manage our costs, capital and liquidity prudently, while investing in our core businesses to position AMP strongly for the medium to long term."
In contemporary wealth protection, or insurance, operating earnings grew by 29% to $154 million, due to new business growth and improved claims experience.
Individual risk annual premium income rose by 17% to $547 million.
The mature business, one of Australia's largest closed life insurance businesses, generated operating earnings $161 million, down 15%.
The decline reflected falling bond yields, poor investment markets and natural run-off of the business.
AMP said its New Zealand business performed well with operating earnings increasing by 17% to $A56 million.
At the group's AMP Capital Investors arm, operating earnings were down nine per cent to $136 million in the year, which AMP said was a solid result given the investment market turmoil.
The earnings were positively impacted by a three per cent rise in management fees to $387 million.
However, total AUM fell 17% to $92 billion, from $111 billion in 2007.
AMP said it remains strongly capitalised with $898 million in surplus capital above the minimum regulatory requirement.
"We have a strong bias toward having more capital than less in the current market," Mr Dunn said.
Group gearing remains at 14%, while underlying interest cover was 10.9 times, AMP said.
"As we've previously flagged, we continue to evaluate options to raise Tier 2 capital to improve the capital mix and replace maturing sub debt, subject to market conditions," Mr Dunn said.
In November AMP raised $559 million from retail and institutional shareholders.
AMP declared a final dividend of 16 cents, on top of an interim payout of 22 cents and a special dividend off two cents paid earlier, taking the annual total to 38 cents.
In 2007, AMP paid a total of 46 cents per share, including a final dividend of 24 cents.
Going forward, AMP's target dividend payout ratio was likely to be in a range of 75% to 85% of underlying profit, with 85% franking.
"We expect continued market volatility through 2009 as the full consequences of the global financial crisis work their way through the economy,'' Mr Dunn said.
Mr Dunn also told wire journalists that net inflows during January 2009 had improved over the same month in 2008, but he warned that it was still early days.
"January is looking more positive but one hot day doesn't make a summer,'' he said.
Mr Dunn said while there was some comfort in the decrease in stock market volatility in early 2009, it was still going to be an uncertain year.
Mr Dunn said AMP expected the world economy to recover or improve at some point during 2010.
"We expect a better outcome in 2010,'' he said.
Mr Dunn said the company's savings business in 2008 had been hit as customers made lower voluntary contributions compared with 2007.
While the slump in equity markets had been a contributing factor, Mr Dunn said 2007 had been exceptionally strong because of government changes to superannuation taxing arrangements.
Mr Dunn said he was pleased by the strong growth in the insurance business.
"They've really turned the performance around,'' he said. He said investors had probably become more aware of their insurance requirements because of the fall in financial markets.
Mr Dunn also noted that AMP had cut its dividend for 2008 and had adjusted its target payout ratio to a range of 75% to 85%, from 85%, because of the need to have a strong balance sheet.
"Our brand stands for strength and security and it's critical that we maintain that,'' told journalists.
"And it does give us the strength to invest in organic growth initiatives.''
Mr Dunn also noted that AMP had increased its number of planners by three per cent during 2008, saying the company expected to increase that number again in 2009.
"When markets do recover we want to make sure we have a robust, large planner franchise that's really productive,'' he added.