* AMP flags 97 pct profit drop
* Slashes dividend by almost 3/4
* Shares hit one-month low (Recasts on dividend cut, adds market reaction, fund manager quote, background)
By Tom Westbrook
SYDNEY, Jan 25 (Reuters) - Australia's largest wealth manager, AMP Ltd AMP.AX , said on Friday it would slash its dividend by almost three-quarters and post a meagre annual profit in 2018 as shareholders paid a price for misconduct exposed by a public inquiry last year.
The 170-year-old company has been rocked by revelations it billed dead customers, charged thousands of people for financial advice they never received, and conspired at board level to deceive regulators about such practices. said in a statement it expected net profit to fall 97 percent to A$30 million and anticipates cutting the annual divided - one of the main attractions of owning AMP stock - from 14.5 Australian cents a year ago to 4.5 Australian cents.
Underlying profit for 2018 would fall around a third to about A$680 million ($482 million), well below analyst expectations of A$747 million.
Shares in AMP dropped as much as 10 percent in early trade, hitting a one-month low, before paring losses to trade 6 percent lower at lunchtime, while the market .AXJO rose 0.4 percent.
"The dividend was never going to be maintained ... shareholders are feeling the pain there," said Hugh Dive, Chief Investment Officer at Atlas Funds Management.
Atlas sold out of the company at a loss last year as the financial inquiry gathered pace, but before AMP shares halved as more misdeeds were exposed and the company said that its funds were bleeding cash as customers took their money elsewhere.
"From our point of view it is uninvestable," Dive said.
The government-ordered inquiry shook public trust across the financial sector, wiping billions from the market capitalisations of banks and wealth managers. AMP was particularly hard-hit, its market value having halved to A$6.9 billion in the past 12 months.
To stem the damage, AMP's CEO and chairwoman resigned and the firm has embarked on a restructure including the sale of its life insurance unit at a hefty discount to London-based Resolution Life in October. expects that business to report a A$105 million operating loss for the six months to end December, it said. It will also book an extra A$200 million in provisions for customer remediation in the 2018 year, as part of a A$778 million years-long repayments plan it announced last November. will report annual results on Feb. 14. ($1 = 1.4112 Australian dollars)