AMP Limited · ASX:AMP
AMP — FY2014 Earnings Presentation
31 slides from AMP's earnings presentation, Feb 19, 2015
Slide 1: 2014 full year results
2014 tull year results 19 February 2015 Craig Meller Chief Executive Officer Gordon Lefevre Chief Financial Officer
Slide 2: Executive summary
Executive summary Financial performance – FY 14 net profit of A$884m (FY 13: A$672m) and underlying profit of A$1,045m (FY 13: A$849m) – 23% lift in underlying profit with double digit growth in all contemporary businesses – Solid net cashflows in wealth management and A$4.8b improvement in AMP Capi
Slide 3: FY 14 profit summary
FY 14 profit summary A$m FY 14 FY 13 % Australian wealth management 374 330 13% AMP Capital¹ 115 99 16% Australian wealth protection 188 64 194% AMP Bank 91 83 10% New Zealand financial services 110 97 13% Australian mature 174 178 (2%) BU operating earnings 1,052 851 24% Group Office costs (62) (62
Slide 4: FY 14 business unit operating earnings
FY 14 business unit operating earnings A$m Growth momentum in all contemporary 124 8 13 businesses (4) 44 16 1,052 851 Wealth Protection FY 13 Business Australian wealth AMP Capital Australian wealth AMP Bank New Zealand Australian mature FY 14 Business Unit operating management operating protection
Slide 5: Business unit results
Business unit results Section 2
Slide 6: Wealth management – overview
Wealth management – overview Continued earnings Key performance measures FY 14 FY 13 growth with good Operating earnings (A$m) 374 330 retail net cashflows and cost control Controllable costs (A$m) (512) (510) Net retail cashflows on AMP platforms (A$m)¹ 3,396 2,470 Total net cashflows (A$m)¹ 2,281
Slide 7: Wealth management – cashflows
Wealth management – cashflows Net cashflows summary (A$m) FY 14 FY 13 Strong net cashflows on AMP AMP Flexible Super 2,182 1,958 platforms offset North 5,530 4,125 external platform Other products and platforms (4,316) (3,613) outflows Total retail on AMP platforms 3,396 2,470 SignatureSuper and Fle
Slide 8: AMP Capital – overview
AMP Capital – overview Earnings growth Key performance measures FY 14 FY 13 from strong external Operating earnings (A$m) 115 99 cashflows and good investment returns Fee income (A$m) 512 473 Performance and transaction fees (A$m) 36 33 Controllable costs (A$m) (331) (318) Cost to income ratio 63.0%
Slide 9: AMP Capital – cashflows and investment performance
AMP Capital – cashflows and investment performance Good international External net cashflows (A$m) FY 14 FY 13 Net cashflows (A$m) FY 14 FY 13 growth reflecting Japan 1,530 (1,557) Internal (3,859) (3,136) continued delivery on strategic China 632 7 initiatives External 3,723 (1,039) Other internati
Slide 10: Wealth protection – overview
Wealth protection – overview Business performing Key performance measures (A$m) FY 14 2H 14 1H 14 FY 13 2H 13 well, with recovery Profit margins 187 99 88 199 102 on track; more work Capitalised (losses)/reversals 2 2 - (48) (48) to do Experience profits/(losses) (1) (4) 3 (87) (54) Income protectio
Slide 11: Wealth protection – improvement plan
Wealth protection – improvement plan Significant changes Management actions continued to drive Guidance improvement evident in FY 14 results to processes, – Best estimate assumptions remain in line with › Claims reserves reduced via improvements in FY 13 and 1H 14 guidance products and culture claim
Slide 12: AMP Bank – overview
AMP Bank – overview Strong profit uplift Key performance measures FY 14 FY 13 with growth in Operating earnings (A$m) 91 83 mortgage distribution via Controllable costs (A$m) (56) (50) adviser network Cost to income ratio 30.3% 29.6% Net interest margin 1.41% 1.39% Residential mortgage book (A$m) 13
Slide 13: New Zealand and Mature – key performance measures
New Zealand and Mature – key performance measures Good cost control New Zealand FY 14 FY 13 Mature FY 14 FY 13 and experience Profit margins (A$m) 88 79 Operating earnings (A$m) 174 178 profits in NZ and mature portfolios Transitional tax relief (A$m)¹ 19 19 AUM (A$b) 22.3 22.5 Experience profits/(l
Slide 14: Financial overview
Financial overview Section 3
Slide 15: Financial overview – key points on P&L
Financial overview – key points on P&L A$m FY 14 FY 13 % Underlying profit 1,045 849 23% Other items¹,² 7 (2) AXA integration costs (20) (57) Business efficiency program costs (100) (39) Amortisation of AXA acquired intangible assets (89) (91) Profit before market adjustments and accounting 843 660
Slide 16: Financial overview – balance sheet and regulatory capital
Financial overview – balance sheet and regulatory capital A$m FY 14 FY 13 Change Balance sheet strength with Shareholder equity 8,346 8,154 192 conservative ratios Total corporate subordinated debt 1,008 1,274 (266) and regulatory Total corporate senior debt 450 700 (250) capital surplus above minim
Slide 17: Financial overview – 2014 dividend
Financial overview – 2014 dividend Lift in dividend Final 2014 dividend of 13.5 cents per share, franked to 80%, representing a full year payout ratio of 74% of underlying profits reflects strong – AMP Limited target dividend payout ratio of 70% to 80% of underlying profit underlying profit – DRP wi
Slide 18: Financial overview – maintaining cost control
Financial overview – maintaining cost control A$m Business efficiency 13 program benefits offset underlying 33 cost growth and increased project investment on growth initiatives (24) 2 1,315 1,301 7 (17) FY 13 Incremental Business Stronger NZ Your SMSF Additional project Underlying cost FY 14 contro
Slide 19: Financial overview – business efficiency program
Financial overview – business efficiency program A$m Pre-tax 200 200 Efficiency program 175 benefits on track to 150 39 150 deliver A$200m pre 125 tax run rate savings 100 by end 2016 75 33 60 138 50 1 17 69 25 18 2 19 0 (31) -25 (56) -50 (90) -75 (143) -100 -125 -150 FY 13 FY 14 FY 15 FY 16 actual
Slide 20: Financial overview – business efficiency program
Financial overview – business efficiency program Solid progress FY 14 achievements FY 15 focus areas throughout FY 14 Enterprise-wide organisation design Continue to improve service efficiencies and completed - an efficient customer focused test new ways of delivering advice to lift operating model
Slide 21: Delivering AMP's promise
Delivering AMP’s promise Section 4
Slide 22: Charting a path to stronger growth
Charting a path to stronger growth Encouraging Strategic priorities: progress on strategy 1. Prioritise investment in A$2.4tr¹ Australian wealth management market by building on leading market implementation positions to capture growth as superannuation industry doubles in size by 2024² 2. Transform
Slide 23: Creating a contemporary, customer centric business 2014
Creating a contemporary, customer centric business 2014 Early activity laying strong foundation to Transform our face-to-face advice model increase growth − Started pilots of new financial advice approaches trajectory of Build omni-channel experience for customers with new and improved ways of inter
Slide 24: Creating a contemporary, customer centric business 2015
Creating a contemporary, customer centric business 2015 2015 will build off current momentum Transform our face-to-face advice model − Refine and scale up advice approaches in pilot Build omni-channel experience for customers with new and improved ways of interacting with us − Integrate wealth and b
Slide 25: Investing selectively in offshore growth
Investing selectively in offshore growth Growing Building partnerships with national champions Targeting pension funds globally international Deepening relationships with Chinese and Japanese Capitalising on increased international investor interest in business through partners to drive cashflows in
Slide 26: Summary
Summary Improved financial – Double digit growth in all contemporary businesses driving increase in underlying profits performance and – Recovery of wealth protection business progressing well – more work to do strategy execution – Continuing to execute on strategy delivering stronger › Core Austral
Slide 27: Appendix
Appendix Section 5
Slide 28: Guidance summary
Guidance summary Costs Bank – FY 15 total controllable costs expected to reflect underlying – Targeting lending growth at or above system subject to funding controllable cost growth of 2.5%–3% before forecast business availability and return on capital hurdles and credit quality efficiency program b
Slide 29: Advice update
Advice update Focus on adviser Market leader in financial advice across Australia quality, productivity – Largest network of financial advisers in Australia - FY 14 adviser numbers up slightly to 3,844¹ and value – Clear commitment to deliver quality advice that benefits customers both financially a
Slide 30: Regulatory environment
Regulatory environment Development Impacts / Issues AMP position Future of Financial Advice commenced Changes in 2014 − Supports ability of advisers to choose business partners June 2013 − Improved mobility of financial advisers in industry − Working with advisers to ensure full compliance by 1 July
Slide 31: Important disclaimer
Important disclaimer Forward-looking statements in this presentation are based on AMP’s current views and assumptions and involve known and unknown risks and uncertainties, many of which are beyond AMP’s control and could cause actual results, performance or events to differ materially from those ex