Slide 1: 2019 half year results and AMP strategy
8 August 2019 For personal use only 2019 half year results and AMP strategy Francesco De Ferrari, Chief Executive Officer Gordon Lefevre, Chief Financial Officer
Slide 2: Executive summary
Executive summary For personal use only 1H 19 results - Challenging first half as AMP transitions and fundamentally de-risks the business; underlying profit of A$309m (1H 18: A$495m) - A$2.35b impairments, predominantly non-cash, to address legacy issues and position AMP for the future - Client reme
Slide 3: Agenda
Agenda For personal use only Section one 1H 19 results Section two AMP Life update Section three AMP Strategy Section four Appendix
Slide 4: 1H Results
For personal use only 1H 19 Results Section one
Slide 5: 1H profit summary
1H 19 profit summary For personal use only A$m 1H 191 2H 18 1H 18 (%) 1H 19/1H 18 Notes: 1. Internal distribution fees and product revenues for AMP Life Australian wealth management 103 159 204 (49.5) excluded from Australian and New Zealand wealth management New Zealand wealth management 22 25 28 (
Slide 6: Australian wealth management
Australian wealth management For personal use only Key performance measures 1H 19 2H 18 1H 18 Challenging Investment-related revenue (A$m)1 540 594 619 and competitive Other revenue(A$m) 17 39 57 environment; Controllable costs (A$m) (247) (239) (223) Operating earnings (A$m) 103 159 204 focus on Op
Slide 7: New Zealand wealth management
New Zealand wealth management For personal use only Key performance measures 1H 19 2H 18 1H 18 Resilient Controllable costs (A$m) (18) (17) (16) business Operating earnings (A$m) 22 25 28 performance Operating earnings (restated) (A$m)1 22 19 22 Average AUM (A$b)2 11.7 11.2 11.1 Total net cashflows(
Slide 8: AMP Bank
AMP Bank For personal use only Key performance measures 1H 19 2H 18 1H 18 Continued Operating profit (A$m) 71 70 78 mortgage and Residential mortgage book (A$m) 19,690 19,460 19,680 deposit growth Controllable costs (A$m) (55) (50) (45) in slowing Deposits (A$m) 13,868 13,304 12,707 Net interest mar
Slide 9: AMP Capital
AMP Capital For personal use only Key performance measures 1H 19 2H 18 1H 18 Strong real assets Performance and transaction fees (A$m) 62 17 52 growth; continued Fee income (A$m) 402 348 360 expansion of Controllable costs (A$m) (239) (238) (215) global footprint Operating earnings (A$m)1 120 73 94
Slide 10: AMP Life
AMP Life1 For personal use only Key performance measures 1H 19 2H 18 1H 18 Significant impact Profit margins (A$m) 116 126 143 of legislative Experience and capitalised losses and other change in one-off items (A$m) (85) (228) (44) Australia Operating earnings (A$m) 2 31 (102) 99 Operating earnings
Slide 11: Controllable costs
Controllable costs 501 For personal use only A$m 15 18 41 468 CPI and wages growth Project costs 427 1H 19 Regulatory, controllable costs ex AMP Capital compliance and insurance costs 1H 18 rebased 1H 18 controllable costs controllable costs ex AMP Capital – Controllable costs (ex AMP Capital) up 17
Slide 12: Key financial items outside business unit results
Key financial items outside business unit results For personal use only A$m 1H 19 2H 18 1H 18 (%) 1H 19/1H 18 Underlying profit 309 185 495 (37.6) Client remediation and related costs (41) (157) (312) 86.9 Royal Commission – (19) (13) n/a Portfolio Review – (10) (19) n/a Separation costs (89) (19) –
Slide 13: Client remediation and associated costs
Client remediation and associated costs For personal use only A$m Pre-tax Client remediation Opening provision balance at 1H 19 656 program on track Less payments made during 1H 191 (31) and in line with Additional lost earnings recognised during 1H 19 11 initial estimate Net movement in estimation
Slide 14: Summary of 1H impairments
Summary of 1H 19 impairments For personal use only A$m Pre-tax Post-tax Goodwill - Australian wealth management 1,509 1,509 - AMP Life 459 459 Prior capitalised project costs 301 211 Advice related assets 245 173 Total impairment recognised at 1H 19 2,514 2,352 Approximate capital impact 139 – Predo
Slide 15: Capital adequacy, funding and liquidity
Capital adequacy, funding and liquidity For personal use only A$m 1H 19 FY 18 Shareholder equity 4,307 6,683 Less: intangibles and other regulatory adjustments (1,267) (3,606) Level 3 eligible capital 3,040 3,077 Minimum Regulatory Requirements (MRR) 1,346 1,426 Level 3 eligible capital above MRR 1,
Slide 16: Capital position
Capital position For personal use only A$m 309 (96) (72) FY18 Dividends paid (139) (net of DRP) 193 1,694 1,651 Business growth (152) Underlying profit Advice impairments Below the line Other FY 18 costs movements 1H 19 Level 3 Level 3 eligible eligible capital capital above MRR above MRR – Level 3
Slide 17: 2019 guidance
2019 guidance For personal use only Australian wealth management AMP Bank Controllable costs – Including MySuper and MyNorth repricing initiatives, – Net interest margin expected to trend down due – FY 19 controllable costs (ex AMP Capital) are and the 2H 19 impact from Protecting Your Super to comp
Slide 18: AMP Life update
For personal use only AMP Life update Section two
Slide 19: AMP Life revised agreement – key terms
AMP Life revised agreement – key terms For personal use only Overview and – Revised agreement delivers consideration of A$3.0 billion comprising: structure – A$2.5 billion in cash; and – A$500 million equity interest (expected to be around 20%) in Resolution Life Australia1 - new Australian-domicile
Slide 20: AMP Life revised agreement – strategic rationale
AMP Life revised agreement – strategic rationale For personal use only Enabling AMP’s – Ensures AMP’s future strategic direction is focused on higher growth, higher return businesses future strategy – Frees up significant capital and avoids investment otherwise required to meet future regulatory req
Slide 21: AMP Life revised agreement – regulatory approvals
AMP Life revised agreement – regulatory approvals For personal use only Regulatory – Constructive engagement with regulators throughout process. Transaction subject to regulatory approvals including: approvals and other – Australia: Federal Treasurer, Foreign Investment Review Board, Australian Prud
Slide 22: AMP Life revised agreement – summary of differences
AMP Life revised agreement – summary of differences For personal use only Updated transaction terms Key differences from original transaction Price & – Total consideration of A$3.0b comprising: – A$300m price reduction reflecting valuation impact of legislative changes consideration (including Prote
Slide 23: AMP Life revised agreement – financial implications
AMP Life revised agreement – financial implications For personal use only Summary of key financial implications Original Revised – The revised transaction has an implied value of A$3.0b, comprising A$2.5b in cash and A$m transaction transaction A$500m equity interest. This reflects significantly hig
Slide 24: AMP Life agreement – proforma capital position
AMP Life agreement – proforma capital position (inc. capital raise) For personal use only 30 June 2019 Impact from 30 June 2019 Proceeds from Proforma A$m completion of sale reported Capital Raise post capital raise of AMP Life and AMP Life sale Level 3 eligible capital 3,040 650 (350) 3,340 Less: M
Slide 25: AMP Life: summary of operating earnings 2017-2019
AMP Life: summary of operating earnings 2017-2019 For personal use only Reported 6 months Reported 12 months Reported 12 months A$m to 30 June 2019 to 31 Dec 2018 to 31 Dec 2017 Australian wealth protection (22) (176) 110 NZ wealth protection and mature 7 39 71 Australian mature 46 134 150 Operating
Slide 26: AMP strategy
For personal use only AMP strategy Section three
Slide 27: Focused, higher growth and higher return AMP
Focused, higher growth and higher return AMP Future portfolio For personal use only AMP Life1 AWM AMP Bank AMP Capital NZ WM – Structural challenges of – Traditional advice licensee – Unique opportunity for bank – Shift to passive and – Competitive advantage operating in life insurance model require
Slide 28: Reinventing AMP: client-led, simpler, growth-oriented
Reinventing AMP: client-led, simpler, growth-oriented For personal use only Australia International Australian Wealth Management AMP Bank AMP Capital Simpler client-led wealth manager Technology enabled challenger Leading global investment manager, with tailored offering to meet the bank that integr
Slide 29: Unique model capitalising on industry disruption
Unique model capitalising on industry disruption For personal use only Product / Asset Retail Advice Platform management banking Approximate revenue A$5b A$10b A$11b A$70b pools (Australia, 2018) Our businesses – Australia’s largest advice - Leading retail superannuation - Leading global infrastruct
Slide 30: Reinventing wealth management in Australia
Reinventing wealth For personal use only management in Australia
Slide 31: Helping clients realise their ambitions
Helping clients realise their ambitions For personal use only Improve financial Provide holistic solutions Make advice literacy for client needs accessible to all Section 3 Strategy 31
Slide 32: Reinventing our business in Australia
Reinventing our business in Australia For personal use only Strategy Objectives Outcomes – Reshape aligned advice to be more – BOLR risk mitigation Australian wealth management professional, compliant, and productive – Fewer, more productive, professional advisers Fix – Simplify super1 to improve cl
Slide 33: Reshaping aligned advice
Reshaping aligned advice For personal use only Reshape the network Estimated capital outlay 1 ~A$550m – Retain professional, client-focused and compliant advisers. Productivity a key driver (~20% of adviser practices account for ~60% of revenue and AuM) – Proactively manage adviser transition in cli
Slide 34: Simplifying super to improve client outcomes
Simplifying super to improve client outcomes For personal use only Simpler governance and better Fewer mastertrust client outcomes1,2 products and platforms2 Super Product admin Investment Trustees Products funds systems options3 Today 2 6 9 72 170 End 2020 1 1 2 5 ~50 Simpler governance structure R
Slide 35: Fulfilling needs with whole-of-wealth solutions
Fulfilling needs with whole-of-wealth solutions For personal use only Example client journey Whole-of-wealth needs fulfilment Fix my Manage Grow Enjoy Protect cash flow my debt my assets my retirement my family Access to high performing AMP investments and superannuation products Best of breed produ
Slide 36: Increasing focus on direct to client channels
Increasing focus on direct to client channels For personal use only Clients via Direct to client Clients via partners employers Substantially increase proportion Participate in market consolidation, Build on strong of revenue through these channels increase professionalism, existing relationships to
Slide 37: Creating a tiered service delivery
Creating a tiered service delivery For personal use only Full service Client price ► – Dedicated ongoing personal relationship with an Adviser Move between as needs change On-demand – Event driven advice supported remotely by AMP experts Self-directed – Automated guidance (digital and human) Financi
Slide 38: Building digital solutions from strong foundations
Building digital solutions from strong foundations For personal use only Bring together existing technology to create compelling digital propositions for clients and advisers Client experience Adviser compliance and productivity MoneyBrilliant and MyAMP Goals-based advice My North Salesforce – Impro
Slide 39: Leading global investment manager
Leading global For personal use only investment manager
Slide 40: Growing through differentiated capabilities
Growing through differentiated capabilities For personal use only Strategy Objectives Outcomes – Continue to expand our global footprint – Significant earnings growth in building on strong track record, infrastructure and real estate Real assets reputation, longstanding relationships – Double digit
Slide 41: Pursuing international growth opportunities
Pursuing international growth opportunities For personal use only China Japan Rest of Asia North America UK/Europe Build on our strong Build on our strong Accelerate our growth Grow presence by building on Build on our deep long relationships, centred around relationship with MUFG: Trust strategy an
Slide 42: Transform culture, improve execution and simplify
Transform culture, For personal use only improve execution and simplify
Slide 43: Reinvigorating our culture
Reinvigorating our culture For personal use only Client-led Entrepreneurial mindset Accountable – Helping clients realise their ambitions – Performance-oriented – Clear decision rights with end-to-end – Agile and more responsive to client needs – Long-term thinking and value creation accountability
Slide 44: Creating a simpler and leaner business
Creating a simpler and leaner business For personal use only Australian wealth AMP Bank AMP Capital management – Increase productivity of salaried advisers – Scale through re-platforming, – Optimise global distribution model Efficient operations – Improve operations efficiency through process digiti
Slide 45: Investing to build the new AMP
Investing to build the new AMP For personal use only Australian wealth management AMP Bank AMP Capital – Digitally enabled propositions – Bank core system and operations capacity – Operating platform investment – Advice network reshape – Digitally enabled propositions Investing in growth (retention
Slide 46: Sequencing our delivery
Sequencing our delivery 2022+ For personal use only 2021 Scale 2020 – Scale wealth management and bank Strengthen growth with fully featured tiered advice propositions – Grow digital, direct, and employed Simplify advice channels – Expand partnership ecosystem to offer best-of-breed products – Deliv
Slide 47: Creating a higher growth and higher return AMP
Creating a higher growth and higher return AMP For personal use only Execute sale of AMP Life to deliver higher growth and higher return portfolio Take action to simplify the organisation and reduce cost Invest to build the best wealth management business in Australia Continue to grow AMP Capital an
Slide 48: Appendix
For personal use only Appendix Section four 1. Overview of AMP’s capital position 2. Business metrics and growth Australian wealth management, AMP Bank and AMP Capital 3. Legislative and regulatory environment
Slide 49: Overview of AMP's capital position
Overview of AMP’s capital position For personal use only Capital in excess – In the normal course of its business, AMP’s eligible capital will fluctuate around the target surplus of target surplus – This excess capital can be used for example to finance growth or be returned to shareholders – To pro
Slide 50: Australian wealth management
Australian wealth management AUM and key products resilient, with continued growth in flagship North platform For personal use only More conservative allocation bias to match clients’ risk profile Continued growth in AMP’s flagship North platform Note: and retirement needs Trailing market AUM (A$b)
Slide 51: AMP Bank
AMP Bank A well capitalised bank delivering an attractive return on capital For personal use only Note: AMP Bank has consistently delivered higher returns on capital than its peer group AMP Bank remains well capitalised compared to peers and regulatory requirements 1. Based on current Return on capi
Slide 52: AMP Bank
AMP Bank A low cost bank with below industry arrears and favourable geographic exposure For personal use only AMP Bank mortgage arrears remain substantially lower than industry on Notes: AMP Bank has a leading cost to income ratio versus its peer group 90+ day and 30+ day metrics 1. Based on Cost to
Slide 53: AMP Capital – international growth
AMP Capital – international growth For personal use only Global partnerships Notes: 1. AMP Capital holds a 15% stake China Life AMP Asset Management (CLAMP)¹ in the joint venture. AMP Capital’s 15% share of AUM is – AUM grew 2.6% (from FY 18) in local currency terms to RMB 207b A$6.4b – Launched 14
Slide 54: AMP Capital
AMP Capital Growth driven by higher margin real assets business For personal use only Notes: Real Estate, Infrastructure and Fixed Income focus Double-digit growth of external AUM 1. Real Estate AUM from external External AUM composition (1H 19) (AUM A$m) 10.0% CAGR clients 2. Infrastructure 90,000
Slide 55: Legislative and regulatory environment
Legislative and regulatory environment For personal use only Proposed reform AMP position Royal Commission into Misconduct in the Banking, Superannuation and – AMP continues to work with Government to ensure that recommendations are consistently applied and Financial Services Industry (Final Report
Slide 56: Important notice
Important notice For personal use only Summary information This presentation has been prepared by AMP Limited (ABN 49 079 354 519) (“AMP"). It is a presentation of general background information about AMP’s activities current at the date of this presentation, which may be subject to change. The info
Slide 57: Important notice (continued)
Important notice (continued) For personal use only Financial data Investors should note that this presentation contains proforma historical financial information. The proforma financial information provided in this presentation is for illustrative purposes only and is not represented as being indica
Slide 58: Important notice (continued)
Important notice (continued) For personal use only Financial data and rounding All dollar values are in Australian dollars ($) and financial data is presented as at 30 June 2019 unless stated otherwise. A number of figures, amounts, percentages estimates, calculations of value and other fractions us
Slide 59: Thank you
For personal use only Thank you