SYDNEY (Reuters) -Australia’s AMP Ltd reported a smaller-than-expected drop in profit for the first half on Thursday, pushing up its shares even as earnings at its core wealth and funds businesses continued to deteriorate. AMP’s shares rose 3.9% despite the shrunken wealth manager registering A$2.7 billion ($2 billion) in client outflows and halting dividend payments until it completes the spin off of its funds management unit in 2022. The 172-year old firm has been embroiled in scandals surrounding its practices and corporate culture, including a lawsuit for charging pensioners ‘fees for no service’, even as it works to divest and simplify its portfolio. “There are certainly some positives in the result,” said Tim Hillier, of Allan Gray, AMP’s largest shareholder. “We are happy with the simplification process they have been undertaking - this will enable them to offer better products.” For the six months ended June, AMP’s statutory profit fell to A$146 million from A$203 million reported a year ago, but better than a consensus estimate of A$112 million. Underlying earnings, the company’s preferred metric that excludes one-off items such as client remediation payments, was up 57% to A$181 million. The flagship Australian wealth management division reported a 17% drop in underlying earnings to A$48 million and ongoing cash outflows, albeit less than the A$4 billion a year earlier. “Clearly we’re still seeing outflows and that is a real concern to me and something I want to focus on,” said new Chief Executive Alexis George, who started in the role this month. “I think that’s about some reputation issues that we need to improve and we’re all focused on doing that.” Its banking division was the stand out performer with a 76% jump in earnings to A$88 million, helped by the reclassification to profit of cash set aside for bad debts due to the pandemic. AMP said it had A$452 million in surplus capital and that it would review the payment of dividends and its capital management strategy after completing the demerger of AMP Capital’s Private Markets business, expected in the first half of 2022. The Sydney-based company said it was on-track to deliver A$300 million of annual run-rate cost savings by fiscal 2022, but analysts say separation costs could be higher than expected. AMP is also set to sell its global equities and fixed income business to Macquarie Group. ($1 = 1.3576 Australian dollars) Reporting by Paulina Duran in Sydney and Soumyajit Saha and Arundhati Dutta in Bengaluru; Editing by Shailesh Kuber, Rashmi Aich and Himani Sarkar Our Standards: The Thomson Reuters Trust Principles.