AMP Limited · ASX:AMP
AMP — H1 2014 Earnings Presentation
30 slides from AMP's earnings presentation, Aug 21, 2014
Slide 1: 2014 half year results
2014 half year results 21 August 2014 Craig Meller Chief Executive Officer Gordon Lefevre Chief Financial Officer
Slide 2: Executive summary
Executive summary Financial performance – 1H 14 net profit of A$382m (1H 13: A$393m) and underlying profit of A$510m (1H 13: A$440m) – 16% lift in underlying profit with double digit growth from all contemporary businesses – Solid net cashflows in Wealth Management and mortgage growth in AMP Bank, a
Slide 3: 1H 14 profit summary
1H 14 profit summary A$m 1H 14 1H 13 % Australian wealth management 183 158 16% AMP Bank 42 38 11% Australian wealth protection 91 64 42% Australian mature 87 85 2% New Zealand financial services 55 46 20% AMP Capital¹ 57 51 12% BU operating earnings 515 442 17% Group Office costs (32) (32) - Total
Slide 4: 1H 14 business performance
1H 14 business performance A$m 17% uplift in business operating earnings with 6 improvement 9 across the board 27 2 25 4 515 442 Wealth Protection 1H 13 Business Unit Australian wealth AMP Bank operating Australian wealth Australian mature New Zealand AMP Capital 1H 14 Business Unit operating earnin
Slide 5: Business unit results
Business unit results Section 2
Slide 6: Wealth management – overview
Wealth management – overview Continued growth in Key performance measures 1H 14 1H 13 operating earnings Operating earnings (A$m) 183 158 despite revenue margin compression Controllable costs (A$m) (256) (251) Net retail cashflows on AMP platforms (A$m) 1,625 1,172 Total net cashflows (A$m)¹ 1,116 1
Slide 7: Wealth management – cashflows
Wealth management – cashflows Net cashflows summary (A$m) 1H 14 1H 13 Robust AMP platform net flows AMP Flexible Super¹ 945 969 offset by external North¹ 2,359 1,864 platform outflows Other products and platforms¹ (1,679) (1,661) Total retail on AMP platforms 1,625 1,172 SignatureSuper and Flexible
Slide 8: AMP Bank – overview
AMP Bank – overview Growing Key performance measures 1H 14 1H 13 contribution to group Operating earnings (A$m) 42 38 despite period of intense price Controllable costs (A$m) (26) (25) competition Cost to income ratio 30.6% 31.5% Net interest margin 1.35% 1.39% Residential mortgage book (A$m) 13,486
Slide 9: Wealth protection – overview
Wealth protection – overview Management Key performance measures 1H 14 2H 13 1H 13 2H 12 1H 12 (A$m) actions gaining traction – more work Profit margins 88 102 97 110 109 still to do Capitalised (losses)/reversals - (48) - - 20 Experience profits/(losses) 3 (54) (33) (54) 5 Income protection (IP) 11
Slide 10: Wealth protection – improvement plan
Wealth protection – improvement plan Focus now on 1H 14 results reflect success of management Guidance actions, including: embedding – 2H 14 profit margins expected to increase › improved claims management processes slightly relative to 1H 14 improvements in for in-force claims, which have reduced –
Slide 11: New Zealand and Mature – key performance measures
New Zealand and Mature – key performance measures New Zealand New Zealand 1H 14 1H 13 Mature 1H 14 1H 13 performing well in a Profit margins (A$m) 46 36 Operating earnings (A$m) 87 85 challenging market Experience profits/(losses) (A$m) (1) 1 Assets under management (A$b) 22.5 22.8 Operating earning
Slide 12: AMP Capital – overview
AMP Capital – overview Strong offshore Key performance measures 1H 14 1H 13 partnerships with Operating earnings (A$m) 57 51 national champions and focus on high Fee income (A$m) 250 229 value add Performance and transaction fees (A$m) 22 16 investment products delivering results Controllable costs
Slide 13: AMP Capital – cashflows and investment performance
AMP Capital – cashflows and investment performance A$3.7b turnaround External net cashflows (A$m) 1H 14 1H 13 Net cashflows (A$m) 1H 14 1H 13 in external Japan 743 (1,365) Internal (1,598) (1,715) cashflows driven by partnerships, China¹ 557 - high value add External 1,642 (2,070) Other internationa
Slide 14: Financial overview
Financial overview Section 3
Slide 15: Financial overview – key points on P&L
Financial overview – key points on P&L Main accounting A$m 1H 14 1H 13 % mismatch relates to Underlying profit 510 440 16% adverse impact from treasury shares due Other items¹,² (3) (5) to higher AMP share AXA integration costs (11) (31) price Business efficiency program (49) - Amortisation of AXA a
Slide 16: Financial overview – balance sheet and regulatory capital
Financial overview – balance sheet and regulatory capital A$m 1H 14 FY 13 Change Maintained low corporate gearing Shareholder equity 8,190 8,154 36 and appropriately Total corporate subordinated debt 1,008 1,274 (266) conservative Total corporate senior debt 700 700 - regulatory capital surplus abov
Slide 17: Financial overview – interim 2014 dividend
Financial overview – interim 2014 dividend 9% increase in Interim 2014 dividend of 12.5 cents per share, franked to 70%, representing a first half payout ratio of 73% of underlying profits interim dividend – AMP Limited target dividend payout ratio of 70% to 80% of underlying profit – DRP will remai
Slide 18: Financial overview – maintaining cost control
Financial overview – maintaining cost control A$m 9 1 5 9 (13) 646 (7) 650 1H 13 controllable Incremental Incremental Removal of R&D Stronger NZ Your SMSF Underlying cost 1H 14 controllable costs (pre tax) integration business efficiency credit exchange rate acquisition growth costs (pre tax) synerg
Slide 19: Financial overview – business efficiency program
Financial overview – business efficiency program A$m 200 Benefits on track 200 to achieve 175 150 39 A$200m pre tax 150 1H 14 125 run rate savings actual benefits (cumulative) 100 by end 2016 8 33 75 60 9 138 50 1 17 69 25 18 2 19 0 (28) -25 (57) -50 (90) -75 (145) -100 -125 -150 FY 13 FY 14 FY 15 F
Slide 20: Financial overview – business efficiency program
Financial overview – business efficiency program Program fully FY 14 focus areas 1H 14 achievements mobilised and Full implementation of organisation design, Majority of changes completed. Now focused on increasing spans of control and reducing bedding down customer focused operating execution layer
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 Consistent, focused Growth strategy framed by four key decisions: strategy builds on 1. Prioritise investment in A$2.3t¹ Australian wealth management market by building on leading current strengths to market positions to capture growth as industry doubles in size²
Slide 23: Transformation of core Australian business underway
Transformation of core Australian business underway Foundation for 1H 14 outcomes 2H 14 planned activities growth in place – Digital platform launched – market leading – New content management system to enable smartphone and tablet applications for personalised customer content delivery across custo
Slide 24: Investing selectively in offshore growth
Investing selectively in offshore growth Strategy to expand Building partnerships with national Targeting pension funds globally champions meaningfully – A$11b in AUM currently sourced from – China Life AMP Asset Management joint international investors offshore progressing venture launched 2 funds
Slide 25: Summary
Summary Momentum building – Growth in all contemporary businesses underpinning significant increase in underlying profits across the business – Substantial progress on strategy execution as strategy gains › Wealth Protection business stabilising traction › Business efficiency program delivering as p
Slide 26: Appendix
Appendix Section 5
Slide 27: Guidance summary
Guidance summary Controllable costs – Continue to anticipate aggregate FY 14 claims will be broadly in line with FY 13 experience, with gradual improvements from FY 14 from the expected impact – FY 14 controllable costs expected to rise by around 1.5% from FY 13 of management actions currently under
Slide 28: Advice overview – adviser numbers
Advice overview – adviser numbers Change 1H 14 FY 13 1H 13 Dec 13 to Jun 14 AMP Financial Planning 1,716 1,706 1,662 10 Charter Financial Planning & Futuro 917 934 890 (17) Hillross 373 367 359 6 Jigsaw Support Services 251 171 183 80 Genesys Wealth Advisers 214 219 237 (5) ipac 159 176 173 (17) Hor
Slide 29: Regulatory environment
Regulatory environment Development Impact/issues AMP position Future of Financial Advice Improved mobility of financial advisers in Expecting some shifts among advisers as restrictions on mobility lifted amendments gazetted 27 industry AMP well positioned to benefit from more advisers electing to jo
Slide 30: 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