AMP Ltd and Genworth Mortgage Insurance have informed shareholders that they have withdrawn performance forecasts for the 2020 financial year (FY20), outlined following the release of their FY19 results.
Both firms have attributed their decisions to growing uncertainty surrounding the economic impact of the coronavirus (COVID-19) pandemic, with analysts now expecting the domestic economy to slip into recession.
AMP’s FY20 guidance included total investment spend of between $450 million to $650 million, which included significant investment in the group’s digital capabilities.
However, AMP Ltd CEO Francesco De Ferrari said the group’s immediate priority is to help consumers affected by the virus.
“In response to uncertainty in Australia and globally, we have taken decisive action to support our clients and people, while working to maintain the strength and resilience of our business,” he said.
“While the situation is rapidly evolving, our immediate priorities are to support the public health efforts, help our clients make the right choices and ensure our people are safe and working in healthy environments.”
Mr De Ferrari said the group has put in place proposals and contingency plans to ensure its operations and client services “can continue throughout the pandemic”.
“Our group balance sheet and liquidity remain strong, and we are confident in our ability to support clients in this time of need,” he added.
AMP noted it remains committed to sell AMP Life by 30 June 2020, divest its New Zealand wealth management business, and complete 80 per cent of its client remediation program.
AMP posted an underlying profit of $464 million in FY19, down 36.7 per cent from $680 million in FY18.
According to AMP, the decline reflected a “challenging environment” for its Australian wealth management business, which posted a 49 per cent drop in its earnings from $363 million to $182 million.
Genworth – which reported a 60 per cent increase in its statutory NPAT in FY19 to $120.1 million – also said its decision to withdraw its guidance was made to enable it to focus on the “wellbeing of its people, customers and all stakeholders the business interacts with”.
The mortgage insurer said that with the ultimate impact of the “unprecedented challenges of COVID-19” and the evolving regulatory landscape “uncertain”, it is “no longer appropriate” to maintain its guidance.
“Genworth is committed to safeguarding the interests of its people, customers, shareholders and other stakeholders, and we are also mindful of our social responsibility to do our part to support the community,” Genworth CEO and managing director Pauline Blight-Johnston said.
“We are working closely with our customers and continue to maintain our standards of service to support them and their borrowers.”
Much of Genworth’s growth in FY19 came off the back of a resurgent housing market; however, analysts are now expecting the current environment to “undo” recent price gains.