(Adds buy-back and special dividend, deal to repurchase 15% stake in AMP Capital and COVID-19 comments)
Aug 13 (Reuters) - Australia's AMP Ltd AMP.AX said on Thursday it would return A$544 million ($389 million) to shareholders through a special dividend and buyback, and repurchase a 15% stake in its funds management arm.
The wealth manager, however, warned it would not a pay a final dividend after it reported a 41.8% plunge in first-half underlying profit from its retained businesses, as the coronavirus-induced market turmoil pummeled fee income and caused a higher loan-loss provision at its banking unit.
The 171-year-old company said it would buy back Mitsubishi UFJ Trust and Banking Corp's 8306.T 15% stake in AMP Capital for A$460 million.
The announcement comes as part of a major overhaul initiated by new Chief Executive Officer Francesco De Ferrari (NYSE:RACE) who took over last year to mend the battered reputation of the financial advisory firm that faces several class action suits.
Underlying profit from the company's retained businesses was A$149 million, down from A$256 million a year earlier.
AMP's domestic wealth-management unit reported net cash outflows of A$4.4 billion for the first half of the year, compared with A$3.1 billion a year earlier, as Australians withdrew larger sums from their pension funds to weather the pandemic.
"With the second wave of COVID-19 impacting the economy here and overseas, we expect conditions to remain challenging," De Ferrari said in a statement.
The company said the sale of its life insurance business helped strengthen its capital position, enabling it to return A$200 million through a share repurchase and A$344 million through a special dividend.
Last week, the Sydney-based firm abruptly said the head of its domestic wealth arm stepped down. = 1.3974 Australian dollars)