Slide 1: 2020 Half Year Results
2020 HALF YEAR RE SU LTS Francesco De Ferrari Chief Executive Officer James Georgeson Chief Financial Officer
Slide 2: Agenda
Agenda Section one Executive summary Section two 1H 20 results Section three Progress on AMP strategy Section four AMP Capital strategy 2
Slide 3: Executive summary
Section one Executive summary 3
Slide 4: Executive summary 1H 20
Executive summary 1H 20 Focus on clients and employees, continued momentum on execution and hitting key milestones Key challenges – Unprecedented and volatile market and economic environment due to COVID-19 – presenting short-term risks, and medium-term growth opportunities – 1H 20 performance refle
Slide 5: Short-term challenges; medium-term opportunities
Short-term challenges; medium-term opportunities Challenges Opportunities Market volatility – Lower average AUM resulting in lower revenues – As one of world’s leading infrastructure investors, and economic uncertainty opportunity to capture value through investment in quality – Rising unemployment
Slide 6: Supporting clients, the community and our colleagues
Supporting clients, the community and our colleagues Clients Community Colleagues Helped ~4,700 clients with mortgage relief; A$2 million in COVID-19 support grants to Agile changes to technology allowed 95% of our program to maintain contact with clients charities from AMP Foundation people to work
Slide 7: 1H 20 results
Section two 1H 20 results 7
Slide 8: COVID-19: Impact in 1H 20
COVID-19: Impact in 1H 20 Focused on clients and business sustainability in a challenging market environment AMP Australia: – Average AUM materially impacted by unprecedented investment market volatility Australian wealth – Average AUM of A$126b; 6% lower compared to 2H 19 management – 1H 20 net cas
Slide 9: 1H profit summary
1H 20 profit summary A$m 1H 20 2H 19 1H 19 % 1H 20 / 1H 19 Australian wealth management 59 79 103 (42.7) AMP Bank 50 70 71 (29.6) AMP Capital1 72 78 120 (40.0) New Zealand wealth management 18 22 22 (18.2) Retained businesses operating earnings 199 249 316 (37.0) Group Office costs (64) (69) (59) (8
Slide 10: 1H business unit highlights
1H 20 business unit highlights AMP Australia: Focus on supporting clients during significant market volatility Australian wealth – Earnings down on 1H 19 due to weaker markets and pricing changes management Op. earnings: A$59m – AUM decreased 9% from 1H 19 to A$121.0b reflecting market impacts of CO
Slide 11: 1H business unit highlights
1H 20 business unit highlights AMP Capital Transaction earnings impacted in unprecedented COVID-19 environment; AUM-based earnings resilient Op. earnings: A$72m – AUM-based earnings resilient period-on-period despite equity market volatility – Average AUM increased 2% from 1H 19 to A$197.6b reflecti
Slide 12: Controllable costs
Controllable costs A$m -18% 501 (96) 1H 19 +1% controllable costs 405 (40) 25 10 410 ex. AMP Capital 20 Removal 1H 19 (10) COVID-19 1H 20 of AMP Life CPI and other related costs rebased controllable Cost out Increased cost increase costs Project costs costs achieved to date regulatory costs ex. AMP
Slide 13: Items reported below underlying profit
Items reported below underlying profit A$m 1H 20 2H 19 1H 19 % 1H 20 / 1H 19 Gain on sale of AMP Life 298 - - n/a AMP Life separation costs (208) (94) (89) (133.7) Client remediation and related costs (19) (112) (41) 53.7 Risk management, governance and controls (14) (16) (17) 17.6 Transformation co
Slide 14: Client remediation
Client remediation On track to be 80% complete by end of FY 20 with costs tracking to expectations – 100% complete in 2021 A$m Pre-tax Closing provision balance at FY 19 652 Less payments made during 1H 201 (64) Additional lost earnings recognised during 1H 20 15 Closing provision balance at 1H 20 6
Slide 15: Gain on sale of AMP Life
Gain on sale of AMP Life A$m Gross cash proceeds per sale agreement 2,500 Investment in Resolution Life NOHC 500 Total consideration per sale agreement 3,000 Purchase price adjustments (87) Adjusted consideration 2,913 Net assets disposed (2,618) Accounting adjustments (16) Gain on sale before tax 2
Slide 16: Capital framework and position at 30 June
Capital framework and position at 30 June Post completion of the AMP Life sale, AMP has approximately A$1.4b of surplus capital under revised capital management framework 3,413 Revised capital framework aims to preserve the financial strength of the group in stressed A$m scenarios The framework comp
Slide 17: Use of surplus capital
Use of surplus capital Post completion of AMP Life sale and in line with the revised capital management framework, surplus capital was A$1,428m as at 30 June 2020 Key uses of the surplus capital at 1H 20: A$m – AMP has agreed to repurchase MUTB’s 15% stake in AMP Capital for a total cash considerati
Slide 18: Progress on AMP strategy
Section three Progress on AMP strategy 18
Slide 19: Opportunities to capitalise on industry disruption
Opportunities to capitalise on industry disruption Australia International markets AWM AMP Bank AMP Capital NZWM Strategic partnerships Market opportunity – Significant, growing – Large domestic market – High global demand for – Increasing need for help Group: market alternatives into retirement CLP
Slide 20: Reinventing AMP – strategy on track
Reinventing AMP – strategy on track Strategic priorities 2020 objectives Our progress against FY 20 commitment Simplify portfolio Complete sale of AMP Life by 30 June Update on New Zealand wealth management divestment process at or before 1H 20 results Reinvent wealth management Advice: Continued fo
Slide 21: Simplify portfolio
Simplify portfolio 21
Slide 22: AMP Life sale completed; NZ wealth management retained
AMP Life sale completed; NZ wealth management retained Strategic objectives Progress in 1H 20 Complete sale – Sale completed 30 June 2020 to Resolution Life of AMP Life – Delivered one of the largest successor fund transfers in Australian history – Two year transitional service agreements in place w
Slide 23: Reinvent wealth management in Australia
Reinvent wealth management in Australia 23
Slide 24: Reinvent advice
Reinvent advice AUM per adviser (A$m) Strategic objectives Progress in 1H 20 Reshape aligned – Adviser network reshape on track – adviser exits delivered to 11.3% CAGR network plan in 1H 20, with rehoming of clients to new practices – Majority of grandfathered commissions removed 50 – Commenced the
Slide 25: Build best-in-class super business
Build best-in-class super business Simplification Strategic objectives Progress in 1H 20 Simplify products – Completed phase one simplification; delivered post-separation and systems target state for trustee, super fund, and product admin systems Simpler governance Fewer products and platforms1,2 an
Slide 26: Grow successful platform business
Grow successful platform business North AUM (A$b) Strategic objectives Progress in 1H 20 Accelerate growth – North net cashflows of A$2.0b up A$0.7b (52%) on 1H 19 16.3% CAGR of North platform – External financial advisers (EFA) inflows into North increased by 39% to A$700m in 1H 20 – Strengthened m
Slide 27: Maintain growth momentum in bank
Maintain growth momentum in bank Residential mortgage portfolio (A$b) Strategic objectives Progress in 1H 20 Investment in core – Delivered technology enhancements to improve client 6.4% CAGR platform; experience digitalisation and – Strong progress in core platform modernisation, to complete by aut
Slide 28: Create a simpler, leaner business
Create a simpler, leaner business 28
Slide 29: Create a simpler, leaner operating model
Create a simpler, leaner operating model Cumulative gross cost savings ex AMP Capital (A$m) Strategic objectives Progress in 1H 20 Establish end-to-end – Organisation streamlined to three operating business units; businesses with AMP Australia, AMP Capital, New Zealand wealth management Controllable
Slide 30: Strengthen risk management and transform culture
Strengthen risk management and transform culture Strategic objectives Progress in 1H 20 Strengthen risk – Completed A$79m (pre-tax) of A$100m (pre-tax) investment to management, date to further strengthen risk management, internal controls controls and and governance governance – Significant progres
Slide 31: AMP Capital strategy
Section four AMP Capital strategy 31
Slide 32: Leverage leading infrastructure and real estate platform
Leverage leading infrastructure and real estate platform Our ambition: Build the best global private markets platform in the world, underpinned by real assets. Refocus public markets to support strategic partners and explore opportunities to scale Private markets Public markets Global equities Infra
Slide 33: Recent growth underpinned by strength in private markets
Recent growth underpinned by strength in private markets Private markets AUM A$b1 Revenue A$m2 Private markets Invested – Infrastructure equity and debt growth Undrawn commitment 14.9% CAGR 18.9% CAGR driven offshore through GIF and IDF closed-end fund series 62 60 492 – Real estate growth from dome
Slide 34: Significant opportunity in private markets looking forward
Significant opportunity in private markets looking forward Private markets industry AUM (US$)1 Attractive future outlook A prolonged low – Market environment conducive for deal flow and attractive interest rate opportunities Infrastructure 14% CAGR environment – Real assets offer diversification, st
Slide 35: Leverage leading infrastructure and real estate platform
Leverage leading infrastructure and real estate platform 30+ year heritage in real assets, with strong track record Scalable strategies Proven investment value-add and sector expertise Trusted client base and strategic partner support Infrastructure equity Infrastructure debt Real estate Global capa
Slide 36: Roadmap for continued growth in private markets
Roadmap for continued growth in private markets Infrastructure Real estate Adjacencies Build on global top 5 position Continue leadership in Australia and New Leverage existing real asset capabilities to in equity and debt Zealand and pursue growth offshore expand in new private markets segments – S
Slide 37: Refocusing public markets to support strategic partners
Refocusing public markets to support strategic partners Capabilities Strategy – Specialised fixed income and competitive Australian – Enhance offers for clients and maximise value for shareholders equities capability delivering strong investment by exploring partnership opportunities to scale the bu
Slide 38: Strategy underpinned by two core strategic enablers
Strategy underpinned by two core strategic enablers – Expand distribution capabilities and footprint while continuing to support partners Build – Deepen penetration across channels (e.g. insurance, sovereigns, HNW) and geographies (US, Europe, Asia) a distribution – Increase cross-sell and wider pla
Slide 39: Summary
Section five Summary 39
Slide 40: In summary
In summary Focused on delivering a simpler, client-led and growth-oriented business Challenges and – Challenging first half in volatile market conditions, due to COVID-19 opportunities – Medium-term opportunities where we can leverage our strengths Return to shareholders – A capital return to shareh
Slide 41: Appendix
Section six Appendix 41
Slide 42: 2H 20 outlook
2H 20 outlook Business Controllable costs – 1H 20 business performance impacted by unprecedented and challenging market FY 20 controllable costs (ex AMP Capital) environment and economic disruption due to COVID-19, with further uncertainty – Expected to be A$850m reflecting ramp up in project invest
Slide 43: AMP Australia: Australian wealth management
AMP Australia: Australian wealth management Prioritising Key performance measures 1H 20 2H 19 1H 19 % 1H 20 / 1H 19 client outcomes Investment related revenue (A$m)1 465 530 540 (13.9) in challenging environment Other revenue (A$m) 9 8 17 (47.1) Controllable costs (A$m) (246) (270) (247) 0.4 Operati
Slide 44: AMP Australia: Australian wealth management
AMP Australia: Australian wealth management AWM AUM A$121.0b by asset class North AUM A$46.0b 6% 5% 16.3% CAGR Cash and fixed interest 32% Australian equities 50 International equities 40 47.6 46.0 28% Property 30 34.9 37.9 Other 20 27.1 10 0 29% FY16 FY17 FY18 FY19 1H 20 AUM market share (%)1 Advic
Slide 45: AMP Australia: AMP Bank
AMP Australia: AMP Bank Maintained Key performance measures 1H 20 2H 19 1H 19 % 1H 20 / 1H 19 competitive Operating earnings (A$m) 50 70 71 (29.6) position with mortgage and Controllable costs (A$m) (53) (59) (55) 3.6 deposit growth Residential mortgage book (A$m) 20,496 20,207 19,690 4.1 Deposits (
Slide 46: AMP Bank
AMP Bank A well-capitalised bank delivering return on capital favourably to peers Return on capital (%) Common Equity Tier 1 (%) 20% 12% 15% 10% 16.7% 8% 10.5% 13.5% 14.1% 13.4% 8.3% 9.7% 10.9% 10.7% 10% Regional peers avg.1 6% Regional peers avg.1 9.1% 5% 4% 2% 0% 0% 2 1H18 2H18 1H19 2H19 1H20 FY16
Slide 47: AMP Bank
AMP Bank A low-cost bank with arrears tracking in line with industry AMP Bank has a leading cost to income ratio versus its peer group AMP Bank mortgage arrears moving largely in line with industry on 90+ day though trending upwards 25 AMP AMP bank Bank 33% 20 20 20 20 19 20 1 Peer1 61% 15 9 9 9 10
Slide 48: AMP Capital
AMP Capital Transaction Key performance measures 1H 20 2H 19 1H 19 % 1H 20 / 1H 19 and sponsor Fee income (A$m) 387 398 402 (3.7) capital earnings impacted Performance and transaction fees (A$m) 38 22 62 (38.7) by COVID-19; Controllable costs (A$m) (254) (288) (239) (6.3) AUM-based earnings Operatin
Slide 49: Transition to closed-end funds and earnings impact
Transition to closed-end funds and earnings impact Broadening our suite of closed-end offerings Stylised closed-end fund lifecycle – GIF and IDF example Existing closed-end funds Infrastructure equity Infrastructure debt Phase 1: – Management fees earned upon receipt (SITE / GIF platform) (IDF platf
Slide 50: New Zealand wealth management
New Zealand wealth management Solid business in process of resetting itself to grow in New Zealand 2019-2020 – Successfully completed separation from the New Zealand Life insurance and mature businesses Simplify the business – Simplified distribution model with advisers now either employed or indepe
Slide 51: New Zealand wealth management
New Zealand wealth management Simplified business Key performance measures 1H 20 2H 19 1H 19 % 1H 20/1H 19 in COVID-19 Operating earnings (A$m) 18 22 22 (18.2) impacted market Controllable costs (A$m) (19) (16) (18) (5.6) Average AUM (A$b)1 11.5 12.0 11.7 (1.9) Total net cashflows (A$m) 20 (183) (25
Slide 52: New Zealand wealth management
New Zealand wealth management Largest non-bank provider of Kiwisaver1 Supported by 17% compound industry growth in KiwiSaver2 34.0% 17.0% CAGR $70 $60 63 Bank owned $50 60 8.9% NZ$b NZ$66.7b Non-bank $40 51 $30 42 AMP 35 $20 30 $10 $0 57.1% 2015 2016 2017 2018 2019 Mar-20 The leading provider of cor
Slide 53: Investing to build the new AMP
Investing to build the new AMP Business units Investment spend AMP Australia AMP Capital 1H 20 Spend FY 20 2H 19 – FY 22 Notes AWM AMP Bank Investing in growth – Digitally enabled – Bank core system and – Operating platform investment A$53m A$100-150m A$350-450m – Included in controllable costs; ref
Slide 54: AMP Life proceeds - capital impact
AMP Life proceeds - capital impact A$m 30 June 2020 Capital released by the sale of AMP Life is A$965m – Expected net proceeds of A$1.1b have been reduced due to Gross sale proceeds 3,000 additional capital injected into AMP Life following best estimate assumption changes following COVID-19 as well
Slide 55: Important notice
Important notice Summary information This presentation has been prepared by AMP Limited (ABN 49 079 354 519) (“AMP"). It is a presentation of general background information about AMP’s activities current at the date of this presentation, which may be subject to change. The information is in a summar
Slide 56: Important notice (continued)
Important notice (continued) Financial data Investors should be aware that certain financial measures included in this presentation are ‘non-IFRS financial information’ under ASIC Regulatory Guide 230: ‘Disclosing non-IFRS financial information’ published by ASIC and also ‘non-GAAP financial measure
Slide 57: Important notice (continued)
Important notice (continued) Financial data and rounding All dollar values are in Australian dollars ($) and financial data is presented as at 30 June 2020 unless stated otherwise. A number of figures, amounts, percentages estimates, calculations of value and other fractions used in this presentatio
Slide 58: Thank you
Thank you 58