AMP Limited · ASX:AMP
AMP — FY2012 Earnings Presentation
39 slides from AMP's earnings presentation, Feb 21, 2013
Slide 1: AMP: 2012 full year results
AMP: 2012 full year results 21 February 2013 Craig Dunn Chief Executive Officer Colin Storrie Chief Financial Officer
Slide 2: Executive summary
Executive summary – FY 12 net profit of A$704m and underlying profit of A$955m 2H 12 underlying profit of A$464m up 3% on 2H 11 – Strong earnings growth in AFS wealth management and AMP Capital, underpinned by growing AUM and disciplined cost control Partially offset by poor lapse and claims exp
Slide 3: Group overview
Group overview Section 2
Slide 4: Group overview – key performance measures
Group overview – key performance measures FY 12 FY 11 2H 12 2H 11 1 Underlying profit A$955m A$909m A$464m A$450m 1 Cost to income ratio 47.3% 47.9% 48.4% 50.6% Growth measures FY 12 FY 11 2 AFS net cashflows A$1,152m (A$581m) Total retail on AMP platforms A$952m A$525m Total Australian wealth manag
Slide 5: Group overview – FY 12 profit summary
Group overview – FY 12 profit summary A$m FY 12 FY 11¹ 2H 12 2H 11 AFS Wealth Management 347 322 183 151 AFS Wealth Protection 190 215 56 107 AFS Mature 167 153 91 77 AFS New Zealand 73 76 35 43 AMP Capital² 99 83 54 38 BU operating earnings 876 849 419 416 Group office costs (61) (57) (30) (31) Tot
Slide 6: Group overview – major drivers of underlying profit
Group overview – major drivers of underlying profit 27 540 (9) (4) 520 9 (5) 10 500 46 18 A$m 480 (9) 464 460 (8) (61) 450 440 420 400 2H 11 Volumes, AMP Capital AMP Controllable Controllable Other Capitalised Experience Underlying MUTB AMP tax 2H 12 underlying including performance Capital cost cos
Slide 7: Integration delivering synergies faster than forecast
Integration delivering synergies faster than forecast 80% of total run rate – Integration well on track to deliver A$150m post tax in synergies, for project spend of A$310m post tax, by end June 2014 synergies now – A$120m post tax cumulative annual run rate synergies delivered by December 2012, up
Slide 8: Business lines
Business lines Section 3
Slide 9: AMP Financial Services – overview
AMP Financial Services – overview Robust sales and Key performance measures FY 12 FY 11 2H 12 2H 11 good growth in AUM Operating earnings (A$m) 777 766 365 378 driving results, along Australian wealth management 347 322 183 151 with falling costs Australian wealth protection 190 215 56 107 Australia
Slide 10: AFS – Wealth Protection overview
AFS – Wealth Protection overview Taking action to Australian risk insurance industry challenged by significant lapse and claims issues mitigate impact of − Industry lapse rates highest in more than a decade poor industry − Poor industry-wide claims experience since 1H 11 trends on risk AMP’s Wealth
Slide 11: AFS – Wealth Management overview
AFS – Wealth Management overview Demonstrating Strong performance in Wealth Management marked by: significant − 21% jump in operating earnings in 2H 12 on 2H 11 operational − 10% lift in AUM to A$86b¹ in 2H 12 − strong net cashflows in flagship products – A$2.6b generated by Flexible Super and lever
Slide 12: AMP Capital – overview
AMP Capital – overview Key performance measures (A$m) FY 12 FY 11 2H 12 2H 11 Operating earnings after minority interests 99 83 54 38 Operating earnings including minority interests 114 83 63 38 Fee income 462 426 239 214 Performance and transaction fees 49 32 26 12 Controllable costs (324) (318) (1
Slide 13: Financial overview
Financial overview Section 4
Slide 14: Financial overview – key points on P&L
Financial overview – key points on P&L A$m FY 12 FY 11 2H 12 2H 11 Underlying profit 955 909 464 450 Market adjustment - investment income¹ (12) (50) (11) (47) Market adjustment - annuity fair value (9) 13 1 (3) Market adjustment - risk products (4) 53 (27) 58 Other items¹,² 34 4 24 21 Profit after
Slide 15: Financial overview – maintaining tight control of costs
Financial overview – maintaining tight control of costs FY 12 costs FY 12 Group-wide controllable costs of A$1,345m, down in line with guidance* driven lower – Underlying cost increase of A$30m (ex-SMSF business and Brookfield joint venture) more than offset by A$78m of synergies through cost contro
Slide 16: Financial overview – balance sheet
Financial overview – balance sheet FY 12 FY 11 Change Strong balance Shareholder equity A$7,744m A$7,014m A$730m sheet, little Total corporate subordinated debt A$879m A$879m - change to Total corporate senior debt A$700m A$657m A$43m corporate gearing Total capital resources A$9,323m A$8,550m A$773
Slide 17: Financial overview – AMP's capital position
Financial overview – AMP’s capital position (as at 31 December 2012) Prior to the impact of LAGIC FY 12 FY 11 Change A$m Regulatory capital resources above Total capital resources 9,323 8,550 773 MRR increased Intangibles (3,808) (3,841) 33 A$877m on FY 11 Tangible capital resources 5,515 4,709 806
Slide 18: Financial overview – update on LAGIC
Financial overview – update on LAGIC FY 12 Pro-forma 1 January 2013 (pre-LAGIC) impact (post-LAGIC) Capital A$m disclosures will be Total capital resources 9,323 - 9,323 impacted by Intangibles (3,808) - (3,808) LAGIC Tangible capital resources 5,515 - 5,515 Senior debt (700) - (700) Other deduction
Slide 19: Financial overview – update on LAGIC
Financial overview – update on LAGIC AMP strengthened AMP’s capital position remains strong after the impact of LAGIC its capital position – Applying LAGIC at 1 January 2013 will lead to a A$272m increase in shareholder capital ahead of new requirements capital standards to Approximately A$200m in
Slide 20: Financial overview – final 2012 dividend
Financial overview – final 2012 dividend Final dividend of Final dividend of 12.5 cents per share, franked to 65%, representing a total 12.5 cents per payout ratio for FY 12 of 76% of underlying profits share, franked to – AMP Limited target dividend payout ratio of 70% to 80% of underlying profit 6
Slide 21: Financial overview – capital summary
Financial overview – capital summary AMP remains well AMP remains well capitalised after applying LAGIC, with shareholder capitalised regulatory capital resources in excess of MRR of $1,372m – Strong capital position provides increased capital flexibility to manage market volatility and regulatory c
Slide 22: AMP's growth strategy: sharpening competitive edge
AMP’s growth strategy: Section 5 sharpening competitive edge
Slide 23: Strong progress against strategic priorities
Strong progress against strategic priorities Goal Competitive strength 2012 highlights Quality – Award-winning – Flexible Super net cashflow A$2.6b; AUM A$7.3b services and superannuation, banking and – North net cashflows A$2.2b; AUM A$4.7b (more than products that risk products doubled in FY 12) r
Slide 24: Strong progress against strategic priorities
Strong progress against strategic priorities Goal Competitive strength 2012 highlights Pursuing – Building Japanese – Launched two new funds with MUTB, attracting A$530m in targeted distribution footprint, net cashflows international – Expanding presence in Asia – Attracted new pension fund investor
Slide 25: Positioning the business for the future – driving growth
Positioning the business for the future – driving growth through a customer-focused AFS Adapting business AFS sharpening competitive edge built through merger and regulatory change by: to capitalise on − innovating in financial advice and distribution, and improving the customer opportunities from e
Slide 26: Positioning the business for the future – SMSF
Positioning the business for the future – SMSF AMP SMSF New SMSF business established in 2H 12 to target fast-growing A$459b1 SMSF market business unit − AMP already SMSF professional administration market leader; 9,100+ funds2; organic growth rate growing since July ’12 is twice SMSF system growth
Slide 27: Positioning the business for the future – growing opportunities offshore
Positioning the business for the future – growing opportunities offshore through reshaped AMP Capital Driving targeted Successfully commercialising the strategic business and capital alliance with MUTB international − Two funds now in-market, attracting A$530m in net cashflows expansion and − Curren
Slide 28: Summary
Summary – Strong earnings growth in AUM-driven businesses underpinned by disciplined cost control demonstrates operational leverage to improving markets – Integration continues to track ahead of plan – with larger advice franchise and North platform providing new growth opportunities – Driving activ
Slide 29: Appendix
Appendix Section 6
Slide 30: Integration program well on track
Integration program well on track Synergy target: net A$150m post tax; includes A$10m net revenue benefits A$m annual run rate A$m realised in P&L Timing of net (cumulative) in each specific reporting synergy delivery (post tax) (actual & estimated)¹ period 30 June 11 actual 18 1H 11 3 31 December 1
Slide 31: AFS – strong and growing adviser force
1.0 AFS – strong and growing adviser force Change Dec 11 to Dec 12 Jun 12 Dec 11 Dec 12 1 AMP Financial Planning 1,736 1,691 1,621 +115 Hillross 337 320 318 +19 SMSF Advice 17 1 - +17 AMP Direct 40 33 27 +13 Charter Financial Planning 791 766 774 +17 Genesys Wealth Advisers 239 250 258 -19 ipac/Tyna
Slide 32: Flexible Super and North create powerful product set
Flexible Super and North create powerful product set AMP Flexible Super superannuation acct AMP Flexible Super retirement acct AUM A$3.2b, customers 149,285, avg balance A$21,500 AUM A$4.1b, customers 22,827, avg balance A$179,900 Flagship products hold almost AUM 1.8% AUM 16.1% (FY 11 1.9%) A$12b i
Slide 33: AMP Bank – strong contributor to AFS Wealth Management earnings
AMP Bank – strong contributor to AFS Wealth Management earnings – 2H 12 operating earnings of A$33m (A$30m in 2H 11) reflects assets growth (up 10% on 2H 11) tempered by lower net interest margin (down 7 bps on 2H 11) – Return on capital of 14.0% in 2H 12, down from 15.2% in 2H 11 – Residential mort
Slide 34: Financial overview – regulatory capital
Financial overview – regulatory capital Regulatory capital resources above MRR of $2,420m at 31 December 2012, up $877m on FY 11 3000 Movements in Shareholder MRR(-A$92m) 955 2,420 2500 37 223 380 89 10 61 (113) (23) 2000 (165) 776 (449) A$m (128) 1,543 1500 553 1000 Movements in regulatory capital
Slide 35: Financial overview – sensitivity to markets
Financial overview – sensitivity to markets Sensitivity of LAGIC impacts the sensitivity of the AMP capital position to market movements capital position to – While available to absorb market and other impacts on participating business, the market policyholder surplus does not form part of the capit
Slide 36: Financial overview – derivative protection
Financial overview – derivative protection AMP continues to AMP continues to use tactical protection to manage market risk. As at 31 December 2012, AMP had in place: actively manage its capital position – equity futures to reduce the equity exposure in AMP Life’s guaranteed business by A$0.5b and ta
Slide 37: Financial overview – regulatory capital reviews update
Financial overview – regulatory capital reviews update AMP has confirmed APRA is developing a supervision framework for conglomerate groups (Conglomerates) transitional – Implementation 1 January 2014, with no changes to existing supervision until that date; arrangements for all draft capital standa
Slide 38: AMP in a post-FoFA and Stronger Super world
AMP in a post-FoFA and Stronger Super world AMP strategically – AMP implemented key elements of regulatory change, including removal of commissions on new superannuation, investment and pension products, and shift to fee for advice, more than 2 years ago well placed for – AMP has the scale, integrat
Slide 39: Regulatory outlook
Regulatory outlook MySuper is a new Stronger Super – Legislating simple, low-cost default superannuation product and auto-consolidation of multiple superannuation low-cost, simple interests default – From 1 January 2014, default superannuation contributions will have to be paid into a commission-fre