AMP Limited · ASX:AMP
AMP — FY2013 Earnings Presentation
37 slides from AMP's earnings presentation, Feb 20, 2014
Slide 1: 2013 full year results
amps 2018 full year results 20 February 2014 Craig Meller Chief Executive Officer Colin Storrie Chief Financial Officer
Slide 2: Executive summary
Executive summary – FY 13 net profit of A$672m (FY 12: A$689m) and underlying profit of A$849m (FY 12: A$950m) Strong underlying earnings growth in wealth management, Bank, mature and NZ businesses Stable earnings from AMP Capital, with good traction in strategy execution, particularly in 2H 13
Slide 3: Group overview
Group overview Section 2
Slide 4: Group overview – key performance measures
Group overview – key performance measures FY 13 FY 12 Underlying profit (A$m) 849 950¹ Cost to income ratio 49.4% 47.3%¹ Growth measures AFS net cashflows (A$m) 1,319 3082 Total retail on AMP platforms (A$m) 2,470 7392 Total Australian wealth management (A$m) 2,166 821 AMP Capital external net cashf
Slide 5: Group overview – FY 13 profit summary
Group overview – FY 13 profit summary A$m FY 13 FY 12 Australian wealth management 330 285¹ AMP Bank 83 62 Australian wealth protection 64 190 Australian mature 178 167 New Zealand 97 73 AMP Capital 99 99 BU operating earnings 851 876 Group office costs (62) (66)² Total operating earnings 789 810 Un
Slide 6: Group overview – major drivers of underlying profit
Group overview – major drivers of underlying profit 4 24 11 (20) 21 45 (38) A$m 950 (80) 870 (68) 849 Wealth Protection FY12 Underlying FY12 profit Australian AMP Australian New Group Australian Australian Australian FY13 underlying investment rebased Wealth Bank Mature Zealand office Wealth Wealth
Slide 7: Business lines
Business lines Section 3
Slide 8: Wealth management – overview
Wealth management – overview Key performance measures FY 13 FY 12 Earnings growth Operating earnings excluding Bank (A$m) 330 285 driven by strong Controllable costs (A$m) (510) (509) business from new and existing Investment-related revenue to AUM (bps) 121 125 customers, as Operating earnings to A
Slide 9: Wealth management – cashflows and adviser network
Wealth management – cashflows and adviser network Net cashflows Net cashflows summary (A$m) FY 13 FY 12 on retail AMP AMP Flexible Super 1,958 2,338 platforms more North 4,125 2,188 than tripled to Other products and platforms¹ (3,613) (3,787) A$2.5b Total retail on AMP platforms 2,470 739 Signature
Slide 10: AMP Bank - overview
AMP Bank - overview Key performance measures FY 13 FY 12 Operating earnings (A$m) 83 62 Controllable costs (A$m) (50) (47) Cost to income ratio 29.6% 34.9% Net interest margin 1.39% 1.23% Residential mortgage book (A$b) 12.8 12.0 Deposits (A$b) 8.7 8.6 Return on invested capital 15.8% 13.8% – AMP Ba
Slide 11: Wealth protection - overview
Wealth protection - overview Key performance measures (A$m) FY 13 2H 13 1H 13 FY 12 2H 12 1H 12 FY 13 operating Profit margins 199 102 97 219 110 109 earnings hit by Capitalised (losses)/reversals (48) (48) - 20 - 20 increased levels Experience profits/(losses) (87) (54) (33) (49) (54) 5 of claims a
Slide 12: Wealth protection profit improvement program
Wealth protection profit improvement program Progress and outcomes since FY 13 implementation Pricing and claims Claims Lapses management most Increased claims Repriced IP Improving claims Increased Tactical customer Reviewed immediate levers; Immediate team sizes to business to finalisation retenti
Slide 13: Wealth protection – next steps
Wealth protection – next steps − Actions and tools to drive improved profit in wealth protection will include: new processes, frameworks and systems for implementation from 2014 new data analytics tools and technology, to better monitor and manage claims and lapses, including use of propensity m
Slide 14: Mature and New Zealand
Mature New Zealand Key performance measures FY 13 FY 12 Key performance measures FY 13 FY 12 Operating earnings (A$m) 178 167 Profit margins (A$m)¹ 98 81 Assets under management Experience profits/(losses) (A$m) (1) (8) 22.5 23.0 (A$b) Operating earnings (A$m)² 97 73 Persistency 89.6% 89.7% Net cash
Slide 15: AMP Capital – overview
AMP Capital – overview Key performance measures FY 13 FY 12 Operating earnings after minority interests (A$m) 99 99 Operating earnings incl minority interests¹ (A$m) 117 114 Fee income (A$m) 473 462 Performance and transaction fees (A$m) 33 49 Controllable costs (A$m) (318) (324) Cost to income rati
Slide 16: AMP Capital – cashflows and investment performance
AMP Capital – cashflows and investment performance External AUM and Cashflows cashflows (A$m) FY 13 AUM 2H 13 1H 13 Australian equities 4,602 97 361 International equities 7,393 (71) (987) Fixed interest 10,458 148 (1,255) Infrastructure 4,704 768 215 Direct investments 19 (2) - Property 13,065 66 (
Slide 17: Financial overview
Financial overview Section 4
Slide 18: Financial overview – key points on P&L
Financial overview – key points on P&L A$m FY 13 FY 12¹ Underlying profit 849 950 Other items (2) 21 AXA integration costs (57) (128) Business efficiency program (39) - Amortisation of AXA acquired intangible assets (91) (99) Profit before market adjustments and accounting 660 744 mismatches² Market
Slide 19: Financial overview – maintaining cost control
Financial overview – maintaining cost control 1,370 1,350 1,330 A$m 1,310 10 1,336 7 1,290 6 3 (59) 1,301 1,270 (2) 1,250 FY 12 Integration Business ACB Cavendish Stronger NZ Underlying cost FY 13 controllable synergies efficiency exchange rate growth controllable costs (pre tax)¹ programme costs (p
Slide 20: Financial overview – balance sheet and regulatory capital
Financial overview – balance sheet and regulatory capital A$m FY 13 FY 12 Change Maintained low Shareholder equity 8,154 7,744 410 corporate Total corporate subordinated debt¹ 1,274 879 395 gearing and increased Total corporate senior debt 700 700 - regulatory Total capital resources 10,128 9,323 80
Slide 21: Financial overview – final 2013 dividend
Financial overview – final 2013 dividend Final 2013 dividend of 11.5 cents per share, franked to 70%, representing a full year payout ratio of 80% of underlying profits – AMP Limited target dividend payout ratio of 70% to 80% of underlying profit – In determining the final 2013 dividend, the Board c
Slide 22: Delivering AMP's promise
Delivering AMP’s promise Section 5
Slide 23: Charting a path to stronger growth
Charting a path to stronger growth Growth strategy framed by four key decisions: Build on current 1. Prioritise investment in A$2.2t1 Australian wealth management market strengths, – Build on leading market positions to capture growth as industry doubles in size2 to 2022 re-orient organisation 2. Tr
Slide 24: Why pursuing a customer-led strategy creates value
Why pursuing a customer-led strategy creates value Transformation lever Links to value creation Provide multi channel access and services, • Improved accessibility will enable solutions for unmet needs; Customers including digital platforms holding 5 or more products/services provide 10x more gross
Slide 25: Reduce costs to maintain market leading efficiency and reinvest in better customer solutions
Reduce costs to maintain market leading efficiency and reinvest in better customer solutions Ahead of plan to Indicative costs and benefits profile (pre tax) achieve A$200m 200 200 run rate savings 175 150 177 150 3 39 by end 2016 125 1 102 100 2 60 75 33 138 50 17 A$m 37 25 18 69 0 19 -25 (28) (57)
Slide 26: Reduce costs to maintain market leading efficiency and reinvest in better customer solutions
Reduce costs to maintain market leading efficiency and reinvest in better customer solutions Planning and – FY 13 business efficiency program delivered: foundations set in 2013; focus on detailed design of future organisation execution in 2014 phase one of multi-asset fund consolidation early
Slide 27: Invest selectively in offshore growth
Invest selectively in offshore growth Build partnerships with national champions in core Asian markets Gaining traction Strong distribution partnerships in China and Japan built on Australian business model experience with strategy to – A$2.2bn raised for inaugural mutual fund in China with JV partn
Slide 28: Summary
Summary – Growth momentum in wealth management, bank and New Zealand, improving investment performance and tight cost control delivering strong underlying earnings growth in these business lines – Actively addressing challenges in life insurance, with some encouraging early signs of progress, althou
Slide 29: Appendix
Appendix Section 6
Slide 30: Guidance
Guidance – Controllable costs FY 14 Group-wide controllable costs expected to rise by around 1.5% from FY 13 ‒ Underlying controllable costs expected to remain flat in 2014, as benefits of business efficiency program offset CPI and wage cost growth. Any outperformance in business efficiency progra
Slide 31: Advice overview – strong and growing adviser force
Advice overview – strong and growing adviser force Change Dec 12 to Dec 13 Jun 13 Dec 12 Dec 13 AMP Financial Planning 1,706 1,662 1,616 90 Hillross 367 359 337 30 Horizons Practice and 142 122 120 22 Academy SMSF Advice 57 16 17 40 AMP Direct 30 38 40 (10) Charter Financial Planning 852 811 791 61
Slide 32: Financial overview: impact of AMP Notes 2
Financial overview: impact of AMP Notes 2 Impacts FY 13 AMP AMP Loan to life Transition FY 13 A$m (prior to AMP Notes 2 Notes companies arrangements Notes 2) issued reinvested1 Total capital resources 9,833 325 (30) - - 10,128 Intangibles (3,857) - - - - (3,857) Tangible capital resources 5,976 325
Slide 33: Financial overview – sources and use of capital since 1H 11
Financial overview – sources and use of capital since 1H 11 A$5.2b A$5.2b Other 0.1 0.2 Capitalised costs1 AMP Notes 2 0.3 0.3 Integration and business efficiency costs2 MUTB strategic alliance 0.4 0.7 Growth in regulatory requirements3 Dividend reinvestment plan 0.6 1.9 Dividends paid 2.3 Underlyin
Slide 34: Regulatory update
Regulatory update MySuper – Launched MySuper offers to meet the different retirement needs of our customers – More than half a million AMP superannuation customers have a MySuper investment option from 1 January 2014 FOFA (Future of Financial Advice) – Series of legislated reforms to the financial s
Slide 35: Australian wealth management historical information
Australian wealth management historical information A$m FY 13 2H 13 1H 13 FY 12 2H 12 1H 12 FY 111 2H 11 1H 111 Profit and loss Revenue Investment related 1,127 581 546 1,026 524 502 956 504 452 Other 106 55 51 101 57 44 104 55 49 Total revenue 1,233 636 597 1,127 581 546 1,060 559 501 Investment ma
Slide 36: AMP Bank historical information
AMP Bank historical information A$m FY 13 2H 13 1H 13 FY 12 2H 12 1H 12 FY 11 2H 11 1H 11 Profit and loss Net interest income 209 108 101 175 92 83 168 85 83 Fee and other income 10 6 4 10 5 5 10 5 5 Total revenue 219 114 105 185 97 88 178 90 88 Bank variable costs (51) (25) (26) (49) (25) (24) (48)
Slide 37: 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