AMP Limited · ASX:AMP
AMP — H1 2013 Earnings Presentation
41 slides from AMP's earnings presentation, Aug 15, 2013
Slide 1: 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 2: Executive summary
Executive summary – 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 operating leverage in recove
Slide 3: Group overview
Group overview Section 2
Slide 4: Group overview – key performance measures
Group overview – key performance measures 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$233m AMP Capital external net cashflows
Slide 5: Group overview – 1H 13 profit summary
Group overview – 1H 13 profit summary A$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 earnings 410 387 423 U
Slide 6: Group overview – major drivers of underlying profit
Group overview – major drivers of underlying profit 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$m 488 453 440 1H 12 Underlying 1H 12 profit Business Other Controllable AMP Capital Wealth C
Slide 7: Business lines
Business lines Section 3
Slide 8: AMP Financial Services (AFS) – overview
AMP Financial Services (AFS) – overview Wealth management Key performance measures 1H 13 2H 12 1H 12 operating earnings Operating earnings (A$m) up 20%, including Australian wealth management 196 183 164 AMP Bank earnings AMP Bank 38 33 29 up 31% Australian wealth protection 64 56 134 Australian mat
Slide 9: AFS – Wealth management overview
AFS – Wealth management overview 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 platforms 1,296 320 joi
Slide 10: AFS – Wealth protection overview 1H 13
AFS – Wealth protection overview 1H 13 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$33m A$24m claims (A$11
Slide 11: AFS – Wealth protection overview: improving IP claims over medium term
AFS – Wealth protection overview: improving IP claims over medium term Tackling IP claims improvement at three levels More assessors Early intervention Best way to influence claims result in short term Tighter processes Claims finalisation program Process Medium term investment focus to improve prod
Slide 12: AFS – Wealth protection overview: resolution of issues
AFS – Wealth protection overview: resolution of issues IP claims Lapses Series of actions Cyclical: economy; unemployment Cyclical: cost of living pressures, unemployment Issues underway to Structural: product design, increased propensity to Structural: industry remuneration structures, claim, lack
Slide 13: AFS – Wealth protection overview: actions underway
AFS – Wealth protection overview: actions underway AMP has scale and − Taking action to improve outcomes, recognising claims volatility and aspects of poorer industry experience are cyclical integrated model to adapt to changing New management with deep industry expertise market and Strengthenin
Slide 14: AMP Capital – overview
AMP Capital – overview AUM growth, strong Key performance measures (A$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 robust Performance an
Slide 15: AMP Capital – strong investment performance
AMP Capital – strong investment performance 3 of top 20 best 1 Year 3 Year performing AUM (A$m) Absolute return1 Excess return2 Absolute return1 Excess return2 Equities balanced funds in Fundamental - Capital 1,852 27.0% 2.3% 10.1% -0.4% Australia3; top Fundamental - SRI 1,464 25.9% 1.2% 9.0% -1.5%
Slide 16: Financial overview
Financial overview Section 4
Slide 17: Financial overview – key points on P&L
Financial overview – key points on P&L A$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 Market adjustment - i
Slide 18: Financial overview – maintaining tight cost control
Financial overview – maintaining tight cost control 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 controllable costs (pre-tax) (
Slide 19: Financial overview – balance sheet
Financial overview – balance sheet 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 capital resources A$9
Slide 20: Financial overview – interim 2013 dividend
Financial overview – interim 2013 dividend Interim 2013 Interim 2013 dividend of 11.5 cents per share, franked to 70%, representing a total dividend of 11.5 payout ratio for 1H 13 of 77% of underlying profits cents a share, – Target dividend payout ratio of 70% to 80% of underlying profit franked to
Slide 21: Financial overview – capital position
Financial overview – capital position 1 January 2013 Regulatory capital 1H 13 (post-LAGIC) Change resources above A$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 capital position Senior
Slide 22: Financial overview – use of capital since 1H 11
Financial overview – use of capital since 1H 11 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 requirements 1.6 Divi
Slide 23: Delivering AMP's promise
Delivering AMP’s promise Section 5
Slide 24: Integration almost complete
Integration almost complete 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 planners added to AMP’s ad
Slide 25: Well positioned to deliver on strategic priorities
Well positioned to deliver on strategic priorities 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, more efficient and inc
Slide 26: Positioning the business for the future
Positioning the business for the future 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 stronger customer attractiv
Slide 27: Delivering AMP's promise – helping people own tomorrow
Delivering AMP’s promise – helping people own tomorrow 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 accessible, relevant and
Slide 28: Continuing to invest in other growth opportunities
Continuing to invest in other growth opportunities 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 targeted offshore 9,650 mem
Slide 29: Further opportunities to improve competitiveness
Further opportunities to improve competitiveness 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$200m eliminate activities
Slide 30: Business efficiency profile
Business efficiency profile 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) -100 -125 -150 FY13 FY14
Slide 31: Summary
Summary 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 improving investment performan
Slide 32: Appendix
Appendix Section 6
Slide 33: Integration program almost complete
Integration program almost complete 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 25 30 June 12 actual 8
Slide 34: Guidance
Guidance – 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 integration cost synergy
Slide 35: AFS overview – strong and growing adviser force
1.0 AFS overview – strong and growing adviser force 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 Wealth Advisers 237 2
Slide 36: AMP Bank – strong contributor to AFS Wealth Management earnings
AMP Bank – strong contributor to AFS Wealth Management earnings – 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 – Residential mortgage book up
Slide 37: Financial overview – regulatory capital
Financial overview – regulatory capital 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 LAGIC calculations (+
Slide 38: Financial overview – regulatory capital reviews update
Financial overview – regulatory capital reviews update 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 issued by group office no
Slide 39: 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, investment and pension products, and shift to fee-for-advice, more than three years ago Scale, integrated – FoFA and Stronger Super legislative and regul
Slide 40: 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 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 Capital Group Based on cu
Slide 41: 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