(Corrects paragraph 6 of Feb. 19 story to show the CEO and chairman stood aside rather than were removed; provides detail of APRA proceedings)
SYDNEY (Reuters) - Australian wealth manager IOOF Holdings Ltd on Tuesday posted a 5 percent rise in underlying first-half profit as it benefited from the part purchase of Australia and New Zealand Banking Group's wealth unit, sending its shares higher.
The Melbourne financial services company said underlying net profit came in at A$99.9 million ($71.2 million) to end-December, compared to A$94.8 million a year ago.
The results were underpinned by a 10 percent surge in funds under management to A$137.8 billion thanks to the ANZ deal, IOOF said.
"We have delivered a solid financial result in a difficult first half-year," acting CEO Renato Mota said in a statement.
IOOF shares jumped 10 percent in early trading on Tuesday, their biggest intraday gain since 2011, compared to a broader market rise of 0.2 percent.
IOOF's reputation was damaged by an inquiry into financial-sector misconduct last year. On Dec 10, 2018, IOOF's CEO and chairman stood aside to contest disqualification proceedings against them launched by the Australian Prudential Regulation Authority (APRA). APRA said it had identified three occasions when units of IOOF had used money belonging to pension fund customers to compensate them for losses caused by the company.
The shares are still trading below the levels they were at before the double-resignation.
IOOF said it expected to spend A$20 million to A$30 million in new compliance costs to remedy issues raised by the inquiry.
"Ensuring we meet the obligations of our licence conditions remains a key priority in the months ahead," said Mota. "We are committed to bringing resolution to each of the requirements."
Statutory profit for the company tripled to A$135.4 million, boosted by one-off gains including the proceeds of the sale of the company's corporate trust business.
($1 = 1.4031 Australian dollars)
(Reporting by Byron Kaye in SYDNEY and Aditya Soni and Nikhil Kurian Nainan in BENGALURU; Editing by Stephen Coates)
