Slide 1: 2019 full year results and strategy update
13 February 2020 2019 full year results and strategy update Francesco De Ferrari, Chief Executive Officer James Georgeson, Chief Financial Officer 1
Slide 2: FY 19 – a year of fundamental reset
FY 19 – a year of fundamental reset Key challenges Full year results impacted by substantial impairment (predominantly non-cash) taken in 1H 19 to address legacy issues and position AMP for the future Increasing regulatory and compliance costs, significant legislative and regulatory change expected
Slide 3: Supporting clients, the community and our colleagues
Supporting clients, the community and our colleagues Clients Community Colleagues Improved client outcomes; fee reductions to A$100 million donated by AMP Foundation since Around 50% of AMP employees took part in approximately 585,000 existing clients2 inception Employee Volunteering Program Around
Slide 4: Agenda
Agenda Section one FY 19 results Section two Progress on Reinventing AMP Section three Outlook Section four Appendix 4
Slide 5: FY 19 Results
Section one FY 19 Results 5
Slide 6: FY 19 profit summary
FY 19 profit summary A$m FY 191 FY 18 % Australian wealth management 182 363 (49.9) AMP Bank 141 148 (4.7) 2 AMP Capital 198 167 18.6 New Zealand wealth management 44 53 (17.0) Retained businesses operating earnings 565 731 (22.7) 3 AMP Life operating earnings (21) (3) n/a Business unit operating ea
Slide 7: FY 19 business unit highlights
FY 19 business unit highlights Real assets drive record profit AMP Capital – 19% increase in earnings driven by growth in AUM and strong real assets performance Op. earnings: A$198m – Average AUM increase driven by investment of real asset committed capital and positive external net cashflows – Cost
Slide 8: Controllable costs
Controllable costs A$m Structural increase in cost First steps in saving to reinvest in of doing business transformation and growth 122 1,035 (27) (19) 28 1,017 Benefit from capitalised 913 FY 18 project cost write-off in 1H 19 FY 19 cost out achieved Project costs and transformation FY 19 Regulator
Slide 9: Items reported below underlying profit
Items reported below underlying profit A$m FY 19 FY 18 Client remediation and related costs (153) (469) Royal Commission - (32) Portfolio Review - (29) Separation costs (183) (19) Risk management, governance and controls (33) (8) Transformation (28) - Other items 22 (74) Impairments (2,407) - Amorti
Slide 10: Client remediation – program on track to complete in 2021
Client remediation – program on track to complete in 2021 Program A$m Pre-tax Closing provision balance at 1H 19 672 expected to be Less payments made during 2H 191 (190) 80% complete Additional provision primarily for inactive advisers 150 by end FY 20 Additional lost earnings recognised during 2H
Slide 11: Summary of FY 19 impairments
Summary of FY 19 impairments FY 19 2H 19 A$m Post-tax Post-tax Goodwill − Australian wealth management 1,509 - − AMP Life 459 - Prior capitalised project costs 211 - Advice related assets 228 55 Total impairment recognised 2,407 55 Approximate capital impact 190 51 – Predominantly non-cash impairmen
Slide 12: Capital adequacy, funding and liquidity
Capital adequacy, funding and liquidity A$m FY 19 FY 18 Shareholder equity 4,910 6,683 Less: intangibles and other regulatory adjustments (1,078) (3,606) Level 3 eligible capital 3,832 3,077 Minimum Regulatory Requirements (MRR) 1,353 1,426 Level 3 eligible capital above MRR 2,479 1,651 Debt metrics
Slide 13: Proforma capital position – AMP Life agreement
Proforma capital position – AMP Life agreement AMP Life Sale 31 Dec 2019 Proforma A$m 31 Dec 2019 reported capital impacts (adjusted for AMP Life sale) Level 3 eligible capital 3,832 (550) 3,282 Less: Minimum regulatory capital requirements (MRR) 1,353 (600) 753 Level 3 eligible capital above MRR 2,
Slide 14: Progress on Reinventing AMP
Section two Progress on Reinventing AMP 14
Slide 15: Focused, higher growth and higher return AMP
Focused, higher growth and higher return AMP Future portfolio 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 requires reinvention and weal
Slide 16: Reinventing AMP – strategic priorities
Reinventing AMP – strategic priorities 1 Divest AMP Life Simplify portfolio 2 Divest New Zealand 3 Reinvent advice Reinvent wealth 4 Build best-in-class super business management in Australia 5 Grow successful platform business 6 Maintain growth momentum in bank Continue to grow successful asset 7 G
Slide 17: Simplify portfolio
Simplify portfolio 17
Slide 18: Divestment of AMP Life and New Zealand
Divestment of AMP Life and New Zealand Strategic objectives Progress in 2H 19 2020 focus Sale of AMP Life – On track for completion – Complete by 30 June 2020, simplifying portfolio – AMP Life operating as standalone business – AMP anticipates that any capital in excess of target surplus post – Posi
Slide 19: Reinvent wealth management in Australia
Reinvent wealth management in Australia 19
Slide 20: Reinvent advice
Reinvent advice Strategic objectives Progress in 2H 19 2020 focus Reshape aligned – Reset commercial terms to more appropriate market based – Continue to reshape network, retaining professional, productive network multiples and compliant advisers – Mitigation of BOLR risk, with capital outlay tracki
Slide 21: Build best-in-class retail super business
Build best-in-class retail super business Strategic objectives Progress in 2H 19 2020 focus Simplify – Simplification program underway in parallel with completion of – Complete phase one of product and platform simplification products and AMP Life transaction Simpler governance and Fewer products sy
Slide 22: Grow successful platform business
Grow successful platform business Strategic objectives Progress in 2H 19 2020 focus Accelerate – Maintained North growth momentum; North AUM up 26% to – Maintain strong growth trajectory with: growth of North A$47.6b – Continued investment in platform features and capability platform – EFA (external
Slide 23: Maintain growth momentum in bank
Maintain growth momentum in bank Strategic objectives Progress in 2H 19 2020 focus Scale through – Bank platform modernisation on track – Bank platform modernisation to complete by FY 20, improving re-platforming, – Deposit portfolio automation and automatic credit efficiency, client experience and
Slide 24: Continue to grow successful asset management franchise
Continue to grow successful asset management franchise 24
Slide 25: Growing AMP Capital through differentiated capabilities
Growing AMP Capital through differentiated capabilities Strategic objectives Progress in 2H 19 2020 focus Accelerate – Significant growth in infrastructure and real estate – Continue momentum in market leading real assets capabilities growth in real – A$3.9b of real assets capital deployed – Deploy
Slide 26: Growing through differentiated capabilities in real assets
Growing through differentiated capabilities in real assets Diverse and expanding investor base Infrastructure Real estate 56 new direct international institutional investors Significant growth in infrastructure strategies; Well placed to maintain prominent position in introduced in FY19 - largely dr
Slide 27: Growing through differentiated capabilities in public markets
Growing through differentiated capabilities in public markets Global Listed Infrastructure – AMP Capital Global Infrastructure Securities Fund (hedged) ranked #1 by Mercer and Morningstar for 1 year performance; Total AUM A$2.6b delivered 37.8% in 2019 against benchmark return 27.2%1 – AMP Capital G
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 Strategic objectives Progress in 2H 19 2020 focus Establish end to – AMP Life and New Zealand wealth management established – Simplify operating model to better align operations with legal end businesses as end-to-end businesses entities with discrete – Estab
Slide 30: Strengthen risk management and transform culture
Strengthen risk management and transform culture Strategic objectives Progress in 2H 19 2020 focus Strengthen risk – Risk management embedded in performance management – On track to complete A$100m (pre-tax) investment to further management, framework strengthen risk management, internal controls an
Slide 31: Reinventing AMP: 2020 objectives
Reinventing AMP: 2020 objectives Towards a client-led, simpler, growth-oriented business 1 Complete sale of AMP Life by 30 June 2020 Simplify portfolio 2 Update on New Zealand wealth management divestment process at or before 1H 20 results Reinvent advice 3 Continued focus on reshaping advice to be
Slide 32: Outlook
Section three Outlook 32
Slide 33: Investing to build the new AMP
Investing to build the new AMP Business units Investment spend AWM AMP Bank AMP Capital FY20 2H 19-FY 22 Notes – Digitally enabled propositions – Bank core system and – Operating platform A$150-200m A$350-450m – Included in – Advice network reshape operations capacity investment controllable costs;
Slide 34: FY 20 controllable cost outlook
FY 20 controllable cost outlook A$m 1,017 ~50 ~810 (170) (90) FY 19 Removal of Additional CPI, rebase variable FY 20 cost controllable AMP Life controllable cost remuneration and guidance costs (ex AMPC) savings to be reinvestment in strategy (ex AMPC) delivered in FY 20 Section 3 Outlook 34
Slide 35: FY 20 outlook
FY 20 outlook Business units Controllable costs FY 20 controllable costs (ex AMP Capital) expected to be approximately A$810m Adjusting for the sale of AMP Life, FY 20 underlying profit expected to be reflecting: removal of AMP Life (A$170m), cost reductions (~A$90m), partly broadly flat on FY 19 of
Slide 36: Creating a higher growth and higher return AMP
Creating a higher growth and higher return AMP Simplify portfolio Reinvent wealth management in Australia and maintain growth momentum in AMP Bank Continue to grow successful asset management franchise Create a simpler, leaner business FY 19 3-5 year outlook NZ AMP Life AMP Capital AMP Bank AWM AMP
Slide 37: Appendix
Section four Appendix Capital position Business unit overview; results, key metrics and growth 37
Slide 38: Capital position
Capital position A$m 771 (113) 389 2,479 464 (190) (96) (397) 1,651 FY 18 Underlying profit Dividend Equity raised Net business Advice related Below the Other capital FY 19 paid (net of usage impairments line costs movements DRP) – As at 31 December 2019, Level 3 eligible capital above MRR of A$2.5b
Slide 39: AMP Australia: Australian wealth management
AMP Australia: Australian wealth management Key performance measures FY 19 FY 18 % FY Investment-related revenue (A$m)1 1,070 1,213 (11.8) Prioritising client Other revenue (A$m) 25 96 (74.0) outcomes in Controllable costs (A$m) (517) (462) (11.9) challenging Operating earnings (A$m) 182 363 (49.9)
Slide 40: AMP Australia: Australian wealth management
AMP Australia: Australian wealth management Continued growth in flagship North platform, AUM and key products resilient More conservative allocation bias to match clients’ Continued growth in AMP’s flagship risk profile and retirement needs North platform 22.9% CAGR AWM AUM (A$134.5b) by asset class
Slide 41: AMP Australia: clientHUB
AMP Australia: clientHUB A holistic, comprehensive, practice management solution Onscreen Launched in Q4 19, clientHUB provides an end-to-end advice training XTOOLS & XTOOLS+ experience for practices, advisers and clients on one platform, with Financial roll-out to AMP’s network in 2020 Various Repo
Slide 42: AMP Australia: AMP Bank
AMP Australia: AMP Bank Key performance measures FY 19 FY 18 % FY Operating earnings (A$m) 141 148 (4.7) Mortgage Controllable costs (A$m) (114) (95) (20.0) and deposit Residential mortgage book (A$m) 20,207 19,460 3.8 growth underpins Deposits (A$m) 14,414 13,304 8.3 resilient Net interest margin 1
Slide 43: AMP Australia: AMP Bank
AMP Australia: AMP Bank A well capitalised bank delivering an attractive return on capital AMP Bank has consistently delivered higher returns AMP Bank remains well capitalised compared to on capital than its peer group peers and regulatory requirements Regional Peers Avg. 1 12% Regional Peers Avg. 1
Slide 44: AMP Australia: AMP Bank
AMP Australia: AMP Bank A low cost bank with below industry arrears and favourable geographic exposure AMP Bank has a leading cost to income ratio versus peer group AMP Bank mortgage arrears remain lower than Cost to Income (FY19) industry on 30+ day and 90+ day metrics AMP mortgage arrears vs indus
Slide 45: AMP Capital
AMP Capital Key performance measures FY 19 FY 18 % FY Performance and transaction fees (A$m) 84 69 21.7 Real assets Fee income (A$m) 800 708 13.0 drive record Controllable costs (A$m) (527) (453) (16.3) profit Operating earnings (A$m)1 198 167 18.6 Average AUM (A$b)2 198 190 4.2 Total external net c
Slide 46: AMP Capital: external clients
AMP Capital: external clients Growth driven by external AUM and higher margin real assets business External AUM driven by Real Estate, Infrastructure External AUM continues to grow, and Fixed Income now 38% of total AUM External AUM Composition (FY19) 9.8% CAGR 90 77.4 Real Estate 34% 70.8 Infrastru
Slide 47: AMP Capital - Infrastructure Equity
AMP Capital - Infrastructure Equity Overview GIF platform Significant growth over the last five years underpinned by strong track record Raised US$3.4b for GIF II, exceeding target and drawing significant co- and investor support for Global Infrastructure Fund (GIF) series investment commitments − N
Slide 48: AMP Capital - Infrastructure Debt
AMP Capital - Infrastructure Debt Overview IDF platform Maintained position as market-leading provider of infrastructure mezzanine Raised US$6.2b from investors for AMP Capital's fourth infrastructure debt debt solutions strategy – the largest of its type in the world − Total invested in infrastruct
Slide 49: AMP Capital - Real Estate
AMP Capital - Real Estate Overview Development pipeline and capability Real Estate growth driven by strong development pipeline, investor support Well placed to maintain prominent position in Australian core real estate for the core real estate business in Australia and 24.9% stake in PCCP through s
Slide 50: New Zealand wealth management
New Zealand wealth management Key performance measures FY 19 FY 18 % FY Controllable costs (A$m) (34) (33) (3.0) Strong Operating earnings (A$m) 44 53 (17.0) underlying Operating earnings (restated) (A$m)1 44 41 7.3 performance Average AUM (A$b)2 12.0 11.1 7.4 in competitive Total net cashflows (A$m
Slide 51: AMP Life
AMP Life1 Impact of Key performance measures FY 19 FY 18 % FY Profit margins (A$m) 222 269 (17.5) PYS ongoing Experience and capitalised losses and (243) (272) 10.7 as structural other one-off items (A$m) Operating earnings (A$m)2 (21) (3) n/a industry Operating earnings restated (A$m) 3 (21) 94 n/a
Slide 52: Important notice
Important notice 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 expres
Slide 53: Thank you
Thank you 53