Slide 1: Half Year Financial Results announcement cover letter
For personal use only 15 August 2013 Manager Client and Market Services Team ASX Market Announcements NZX Limited Australian Securities Exchange Level 1, NZX Centre, 11 Cable Street Level 4, 20 Bridge Street PO Box 2959 Sydney NSW 2000 Wellington, New Zealand Announcement No: 25/2013 AMP Limited (AS
Slide 2: 2013 half year results
amp>4 2018 half year results 15 August 2013 Craig Dunn Chief Executive Officer Craig Meller Colin Storrie Managing Director, AFS Chief Financial Officer
Slide 3: Executive summary
Executive summary For personal use only – 1H 13 net profit of A$393m (1H 12: A$373m) and underlying profit of A$440m (1H 12: A$488m) Strong operating earnings in most businesses, offset by poor lapse and claims experience in wealth protection, demonstrating potency of business franchise and operat
Slide 4: Group overview
For personal use only Group overview Section 2
Slide 5: Group overview – key performance measures
Group overview – key performance measures For personal use only 1H 13 1H 12 Underlying profit A$440m A$488m Cost to income ratio 48.6% 46.5% Growth measures AFS net cashflows A$862m (A$113m) Total retail on AMP platforms A$1,296m A$320m Total Australian wealth management A$1,383m A$233m AMP Capital
Slide 6: Group overview – 1H profit summary
Group overview – 1H 13 profit summary For personal use only A$m 1H 13 2H 12 1H 12 AFS wealth management 196 183 164 AFS wealth protection 64 56 134 AFS mature 85 91 76 AFS New Zealand 46 35 38 AMP Capital² 51 54 45 BU operating earnings 442 419 457 Group office costs¹ (32) (32) (34) Total operating
Slide 7: Group overview – major drivers of underlying profit
Group overview – major drivers of underlying profit For personal use only Most business performing well, 51 2 12 delivering 17% (5) (15) overall lift in (20) (35) operating (38) earnings (ex wealth protection) Wealth protection A$m 488 453 440 1H 12 Underlying 1H 12 profit Business Other Controllabl
Slide 8: Business lines
For personal use only Business lines Section 3
Slide 9: AMP Financial Services (AFS) – overview
AMP Financial Services (AFS) – overview For personal use only Wealth management Key performance measures 1H 13 2H 12 1H 12 operating earnings Operating earnings (A$m) up 20%, including Australian wealth management 196 183 164 AMP Bank earnings AMP Bank 38 33 29 up 31% Australian wealth protection 64
Slide 10: AFS – Wealth management overview
AFS – Wealth management overview For personal use only Net cashflows summary (A$m) 1H 13 1H 12 Net cashflows increased nearly AMP Flexible Super 1,093 1,289 sixfold, driven by North 1,864 636 strong sales and More traditional products and platforms (1,661) (1,605) new practices Total retail on AMP p
Slide 11: AFS – Wealth protection overview
AFS – Wealth protection overview 1H 13 For personal use only Industry claims Wealth protection operating earnings reflect poorer claims and lapse experience experience often − 1H 13 operating earnings of A$64m, down 52% on 1H 12 results, and up 14% on 2H 12 volatile − 1H 13 experience losses of A$33
Slide 12: Wealth protection: improving IP claims over medium term
AFS – Wealth protection overview: improving IP claims over medium term For personal use only Tackling IP claims improvement at three levels More assessors Early intervention Best way to influence claims result in short term Tighter processes Claims finalisation program Process Medium term investment
Slide 13: Wealth protection: resolution of issues
AFS – Wealth protection overview: resolution of issues IP claims Lapses For personal use only Series of actions Cyclical: economy; unemployment Cyclical: cost of living pressures, unemployment Issues underway to Structural: product design, increased propensity to Structural: industry remuneration st
Slide 14: Wealth protection: actions underway
AFS – Wealth protection overview: actions underway For personal use only AMP has scale and − Taking action to improve outcomes, recognising claims volatility and aspects of poorer industry experience are cyclical integrated model to adapt to changing New management with deep industry expertise mar
Slide 15: AMP Capital – overview
AMP Capital – overview For personal use only AUM growth, strong Key performance measures (A$m) 1H 13 2H 12 1H 12 investment Operating earnings after minority interests 51 54 45 performance and Operating earnings including minority interests* 60 63 51 good cost control Fee income 229 239 223 underpin
Slide 16: AMP Capital – strong investment performance
AMP Capital – strong investment performance For personal use only 3 of top 20 best 1 Year 3 Year performing AUM (A$m) Absolute return1 Excess return2 Absolute return1 Excess return2 Equities balanced funds in Fundamental - Capital 1,852 27.0% 2.3% 10.1% -0.4% Australia3; top Fundamental - SRI 1,464
Slide 17: Financial overview
For personal use only Financial overview Section 4
Slide 18: Financial overview – key points on P&L
Financial overview – key points on P&L For personal use only A$m 1H 13 2H 12 1H 12 Underlying profit 440 462 488 , , Other items¹ ² ³ (5) 17 4 AXA integration costs (31) (57) (71) Amortisation of business acquired² (47) (49) (50) Profit before market adjustments and 357 373 371 accounting mismatches
Slide 19: Financial overview – maintaining tight cost control
Financial overview – maintaining tight cost control For personal use only 6 Controllable costs 2 down 3% in 1H 13, 10 reflecting synergy (36) delivery and continued A$m 670 disciplined 652 management 1H 12 controllable costs ACB¹ Cavendish² Integration synergies Underlying cost growth 1H 13 controll
Slide 20: Financial overview – balance sheet
Financial overview – balance sheet For personal use only 1H 13 FY 12 Change Strong balance sheet, little Shareholder equity A$7,955m A$7,744m A$211m change to Total corporate subordinated debt A$979m A$879m A$100m corporate gearing Total corporate senior debt A$700m A$700m - and interest cover Total
Slide 21: Financial overview – interim 2013 dividend
Financial overview – interim 2013 dividend For personal use only Interim 2013 Interim 2013 dividend of 11.5 cents per share, franked to 70%, representing a total dividend of 11.5 payout ratio for 1H 13 of 77% of underlying profits cents a share, – Target dividend payout ratio of 70% to 80% of underl
Slide 22: Financial overview – capital position
Financial overview – capital position For personal use only 1 January 2013 Regulatory capital 1H 13 (post-LAGIC) Change resources above A$m MRR up A$331m Total capital resources 9,634 9,323 311 on 1 January 2013 Intangibles (3,807) (3,808) 1 (post LAGIC) Tangible capital resources 5,827 5,515 312 ca
Slide 23: Financial overview – use of capital since 1H 11
Financial overview – use of capital since 1H 11 For personal use only Since 1H 11, AMP has paid A$1.6b in A$b 4.3 4.3 dividends and 0.1 Capitalised costs1 MUTB strategic alliance 0.4 0.2 met increased Integration costs2 regulatory Dividend reinvestment plan 0.6 0.7 Growth in regulatory requirements3
Slide 24: Delivering AMP's promise
For personal use only Delivering AMP’s promise Section 5
Slide 25: Integration almost complete
Integration almost complete For personal use only Synergies Well-managed integration has created a stronger, more competitive organisation, with sharper delivered execution capabilities – 93 per cent – Program met or exceeded key objectives: complete maintained business momentum • 300 net new plan
Slide 26: Well positioned to deliver on strategic priorities
Well positioned to deliver on strategic priorities For personal use only With integration Strength in competitive position and execution capabilities almost complete, Benefits of merger and execution capabilities sharpened through integration, mean AMP well positioned to create accelerating leaner,
Slide 27: Positioning the business for the future
Positioning the business for the future For personal use only Extending current Building on strengths of merged business to sharpen competitive edge priorities to More recent strategic priorities focused on: capitalise on leveraging benefits from AXA merger – while driving growth through a stron
Slide 28: Delivering AMP's promise – helping people own tomorrow
Delivering AMP’s promise – helping people own tomorrow For personal use only Sharpening focus 1. Putting customers at the centre of AMP on improved Deep focus on understanding and solving customers’ financial challenges throughout their customer lives, ensuring our expertise and advice is more acc
Slide 29: Continuing to invest in other growth opportunities
Continuing to invest in other growth opportunities For personal use only Responding to 2. Newly-established SMSF business growing strongly changing customer Market leader in SMSF administration after a year in operation needs in SMSF and Continuing to grow at twice the rate of the market targete
Slide 30: Further opportunities to improve competitiveness
Further opportunities to improve competitiveness For personal use only New efficiency New 3 year business efficiency program to drive earnings growth and improved returns program to deliver Program will ensure AMP remains competitive, is able to provide more choice to customers and recurring A$200
Slide 31: Business efficiency profile
Business efficiency profile For personal use only Indicative costs and benefits profile (pre tax)* A$200m run rate savings by 200 200 177 end 2016, utilising 175 2 150 39 150 integration skills 125 1 102 100 and experience 75 1 60 33 138 50 37 A$m 25 10 18 69 0 19 (25) -25 (60) -50 (90) -75 (145) -1
Slide 32: Summary
Summary For personal use only Results – Underlying business tracking well, apart from wealth protection result demonstrate Clear actions in place to improve wealth protection returns and customer outcomes over potency of business medium term franchise, scale and – Tight cost control, with improvin
Slide 33: Appendix
For personal use only Appendix Section 6
Slide 34: Integration program almost complete
Integration program almost complete For personal use only Synergy target: net A$150m post tax; includes A$10m net revenue benefits A$m annual run rate Timing of net (cumulative) A$m realised in P&L synergy delivery (post tax) (actual & estimated)* 30 June 11 actual 18 31 December 11 actual 55 FY 11
Slide 35: Guidance
Guidance For personal use only – Controllable costs FY 13 group wide controllable costs expected to be 2% lower than FY 12 Medium term, estimated underlying controllable cost growth of 2.5% - 3% p.a. before efficiency program benefits and remaining cost synergy benefit Estimated incremental in
Slide 36: AFS overview – strong and growing adviser force
1.0 AFS overview – strong and growing adviser force For personal use only Change Dec 12 to Jun 13 Dec 12 Jun 13 AMP Financial Planning 1,662 1,616 +46 Hillross 359 337 +22 Horizons Practice and Academy 122 120 +2 SMSF Advice 16 17 -1 AMP Direct 38 40 -2 Charter Financial Planning 811 791 +20 Genesys
Slide 37: AMP Bank – strong contributor to AFS Wealth Management earnings
AMP Bank – strong contributor to AFS Wealth Management earnings For personal use only – 1H 13 operating earnings of A$38m (A$29m in 1H 12) reflect assets growth (up 6% on 1H 12) and higher net interest margin (up 17 bps on 1H 12) – Return on capital of 15.4% in 1H 13, up from 13.4% in 1H 12 – Reside
Slide 38: Financial overview – regulatory capital
Financial overview – regulatory capital For personal use only Compared to the post-LAGIC FY 12 capital position, regulatory capital resources above MRR increased by A$331m to A$1,703m 2,000 440 (36) 111 71 76 1,500 81 (291) (66) (272) (55) A$m 1,000 1,644 1,372 1,703 500 0 1. Includes refinements to
Slide 39: Financial overview – regulatory capital reviews update
Financial overview – regulatory capital reviews update For personal use only APRA developing new capital standards for conglomerate groups which apply to AMP, expected to be fully effective from 1 January 2015 Draft standards released in May 2013, with key impacts including: – subordinated debt issu
Slide 40: FoFA and Stronger Super regulatory update
FoFA and Stronger Super regulatory update – Key elements of regulatory change implemented, including removal of commissions on new superannuation, For personal use only investment and pension products, and shift to fee-for-advice, more than three years ago Scale, integrated – FoFA and Stronger Super
Slide 41: Estimated net run rate benefits of efficiency program by business area
Estimated net run rate benefits of efficiency program by business area before and after allocation of group costs For personal use only After group allocations A$m before tax Before group allocations 200 200 22 150 77 29 60 18 14 60 149 105 27 4 76 11 3 10 22 3 2013 2014 2015 2016 2016 AFS AMP Capit
Slide 42: Important disclaimer
Important disclaimer For personal use only 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 ma