Slide 1: Half Year Financial Results announcement cover
For personal use only 16 August 2012 Manager Manager ASX Market Announcements Market Information Services Section Australian Securities Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Level 24, NZX Centre, 11 Cable Street Sydney NSW 2000 Wellington, New Zealand Announcement No: 25/2012
Slide 2: 2012 half year results
= © 2012 half year results d) 16 August 2012 olin Storrie hief Financial Officer
Slide 3: Executive summary
Executive summary For personal use only Actively driving – Underlying profit of A$491m, up 9% on 2H 11; net profit of A$383m, up 12% on 2H 11, reflecting resilient earnings growth business operations, strong cost control and delivery of integration synergies and cost – Business strength evident in g
Slide 4: Group overview
For personal use only Group overview Section 2
Slide 5: Group overview – key performance measures
Group overview – key performance measures For personal use only 1H 12 2H 11 1H 11 Interim dividend of 12.5 cps, 55% Underlying profit A$491m A$450m A$459m1 franked; payout Growth measures ratio 73% of AFS net cashflows2 A$301m (A$675m) A$94m underlying profit Total retail on AMP platforms A$734m A$2
Slide 6: Group overview – 1H profit summary
Group overview – 1H 12 profit summary For personal use only 1 A$m 1H 12 2H 11 1H 11 AFS Contemporary Wealth Management 164 151 171 AFS Contemporary Wealth Protection 134 107 108 AFS Mature 76 77 76 AFS New Zealand 38 43 33 2 AMP Capital 45 38 45 BU operating earnings 457 416 433 Group office costs (
Slide 7: Group overview – major drivers of underlying profit
Group overview – major drivers of underlying profit For personal use only 520 Business 8 initiatives driving 15 500 (6) increase in (8) 491 8 underlying profit (7) 8 480 23 460 450 A$m 440 420 400 2H 11 Controllable Volumes, AMP Capital Capitalised Underlying MUTB minority AMP tax loss Other 1H 12 u
Slide 8: Business lines
For personal use only Business lines Section 3
Slide 9: AMP Financial Services – overview
AMP Financial Services – overview For personal use only Tight cost control Key performance measures 1H 12 2H 11 Change and re-pricing Operating earnings (A$m) initiatives in risk Australian contemporary wealth management 164 151 +9% insurance drove Australian contemporary wealth protection 134 107 +
Slide 10: AFS – net cashflows
AFS – net cashflows For personal use only Contemporary Net cashflows summary (A$m)1 1H 12 2H 11 1H 11 products and AMP Flexible Super 1,289 1,526 1,474 platforms North 636 507 209 attracting SMSF2 414 120 82 improved flows in 3 More traditional products and platforms (1,605) (1,913) (1,278) a challe
Slide 11: AFS – strong and growing adviser force
1.0 AFS – strong and growing adviser force For personal use only Change Dec-11 to Australian planner Jun-12 Dec-11 Jun-11 Jun-12 numbers have AMP Financial Planning 1,724 1,653 1,566 71 grown 7% since Hillross 320 318 277 2 1H 11, including AMP Financial Planners 2,044 1,971 1,843 73 Futuro acquisit
Slide 12: AMP Capital – overview
AMP Capital – overview For personal use only Tight cost control Key performance measures (A$m) 1H 12 2H 11 Change and higher fee Operating earnings after minority interests1 45 income drove Operating earnings including minority interests 51 38 +34% increase in Fee income 223 214 +4% operating earnin
Slide 13: Financial overview
For personal use only Financial overview Section 4
Slide 14: Financial overview – summary
Financial overview – summary For personal use only A strong balance – Strong balance sheet with significant liquidity, undrawn facilities and low corporate gearing sheet means AMP – Maintaining tight control of cost base – Group-wide controllable costs down 5% on 2H 11 well positioned for – A$503m i
Slide 15: Financial overview – key points on P&L
Financial overview – key points on P&L For personal use only A$m 1H 12 2H 11 1H 111 Underlying profit 491 450 459 Market adjustment - investment income (1) (47) (3) Market adjustment - annuity fair value (10) (3) 16 Market adjustment - risk products 23 58 (5) Other items 10 21 (17) Regulatory change
Slide 16: Financial overview – maintaining tight control of costs
Financial overview – maintaining tight control of costs For personal use only FY 12 costs 1H 12 Group-wide controllable costs of A$666m, down 5% on 2H 11 continue to track – 1H 12 AFS controllable costs of A$463m, down 5% on 2H 11 downwards in line – 1H 12 AMP Capital controllable costs of A$159m, d
Slide 17: Financial overview – balance sheet
Financial overview – balance sheet For personal use only 1H 12 FY 11 Change Strong balance Shareholder equity A$7,554m A$7,014m A$540m sheet, little Total corporate subordinated debt A$879m A$879m No change change to Total corporate senior debt A$700m A$657m A$43m corporate gearing Total capital res
Slide 18: Financial overview – AMP's capital position
Financial overview – AMP’s capital position For personal use only 1H 12 FY 11 Change A$m Regulatory capital Total capital resources 9,133 8,550 583 resources above Intangibles (3,809) (3,841) 32 MRR up by A$503m on FY 11 Tangible capital resources 5,324 4,709 615 Senior debt (700) (657) (43) Other d
Slide 19: Financial overview – derivative protection
Financial overview – derivative protection For personal use only AMP continues to AMP has a dynamic capital management framework to protect its regulatory capital position under actively manage various scenarios, using both strategic and tactical methodologies its capital position Capital initiative
Slide 20: Financial overview – sensitivity to markets
Financial overview – sensitivity to markets For personal use only Sensitivity of Capital sensitivities – regulatory 1H 12 FY 11 Change capital position to capital resources above MRR (A$m) market movements well Actual surplus 2,046 1,543 +503 understood and Impact of 20% decrease in equity (250) (40
Slide 21: Financial overview – regulatory capital reviews update
Financial overview – regulatory capital reviews update For personal use only AMP expects APRA is currently implementing new capital standards for life and general insurers (LAGIC) LAGIC to reduce – A number of final prudential standards were issued in May 2012, with the remaining final prudential sh
Slide 22: Financial overview – regulatory capital reviews update
Financial overview – regulatory capital reviews update For personal use only AMP has confirmed APRA is also developing a supervision framework for conglomerate groups (Conglomerate) transitional – Implementation deferred until 1 January 2014, with no changes to existing supervision until that date;
Slide 23: Financial overview – interim 2012 dividend
Financial overview – interim 2012 dividend For personal use only Interim dividend of Interim dividend of 12.5 cents per share, franked to 55%, representing a payout ratio of 73% of 12.5 cents per underlying profits share, franked to – Target payout policy of 70% to 80% of underlying profit 55% – Giv
Slide 24: AXA integration
For personal use only AXA integration Section 5
Slide 25: Integration continues to exceed expectations
Integration continues to exceed expectations For personal use only Integration Integration achieving all key objectives program on track 1. Maintaining business momentum while bringing the two companies together to complete six – Integration program delivery accelerating, while all key business stab
Slide 26: Higher synergy target; delivery tracking ahead of plan
Higher synergy target; delivery tracking ahead of plan For personal use only – A$14m of expected revenue attrition upgraded to only A$4m, increasing overall synergies by A$10m – A$82m (post tax) in cumulative annualised run-rate synergies achieved at end 1H 12 – Revenue synergies of A$10m+ (annual r
Slide 27: Integration program well into execution
Integration program well into execution For personal use only 64% of integration Program Mid-2014 2011 2012 Program execution projects will be established completed completed by year Current stage end Program execution accelerated in 1H 12 Major initiatives in 2H 12 delivering: Completed organisatio
Slide 28: AMP's growth strategy: sharpening competitive edge
For personal use only AMP’s growth strategy: Section 6 sharpening competitive edge
Slide 29: The new AMP – powerful competitive position
The new AMP – powerful competitive position For personal use only Scale and cost – Low cost manufacturer Market-leading efficiency – Integration creating new scale benefits and efficiency opportunities position in key Leading market share – Leading independent wealth management company in Australia
Slide 30: Executing our strategy
Executing our strategy For personal use only Delivering outstanding growth in business value through: Goal Progress Quality services and products Launched new capabilities for Australian Fundamental Equities, as well as the Multi Building more – that respond to the needs of Asset and Dynamic Asset A
Slide 31: Positioning the business for the future – SMSF
Positioning the business for the future – SMSF For personal use only Established new SMSF business unit to target fast-growing A$416b1 SMSF market 2 – SMSF segment is largest part of superannuation market; projected to reach more than A$2.2 trillion by 2030 Attractive – New SMSF business unit headed
Slide 32: Positioning the business for the future – capitalising on regulatory change
Positioning the business for the future – capitalising For personal use only on regulatory change Increasing clarity about likely impact of new regulatory environment Regulatory change – Overall framework clearer, although significant detail still to come on both Future of Financial Advice offering
Slide 33: Positioning the business for the future – growing opportunities offshore
Positioning the business for the future - growing For personal use only opportunities offshore Key element of Partnering with prominent local distributors to take investment capabilities into new markets, strategy is linking replicating successful Australian model large savings Successfully commerci
Slide 34: Summary
Summary For personal use only New AMP – Robust operating earnings, strong sales of contemporary products and platforms and continued cost adapting quickly discipline demonstrate power of merged business in challenging market conditions to changing – Well managed integration continues to exceed expec
Slide 35: Appendix
For personal use only Appendix Section 7
Slide 36: The new AFS – a formidable competitor
The new AFS – a formidable competitor For personal use only More ways to AMPFP FAN (AXA/Charter Hillross ipac/Tynan SMSF IFAs NZ aligned Mortgage Employers reach more FP, Genesys, Mackenzie advice network brokers Jigsaw), Futuro Australians and 1,724 planners 1,347 advisers 320 advisers 183 advisers
Slide 37: The new AMP Capital – international capability and presence
The new AMP Capital – international capability and For personal use only presence Using investment Property Infrastructure Multi Asset Group Fixed income Equities capability and Investment Top tier manager across International footprint Innovative new Consistent, Strengthening Australian capability
Slide 38: AMP Flexible Super – performing as designed
AMP Flexible Super – performing as designed For personal use only – AUM of A$5.7b in 1H 12 – 136,300 customers, up from 106,500 in December 2011 – 1H 12 net cashflows A$1.3b; superannuation account A$616m, pension account A$672m – A$12m in cash inflows to Flexible Super from FAN network since full r
Slide 39: North – now a market-leading wrap platform
North – now a market-leading wrap platform For personal use only Development of award-winning, full wrap capability has generated strong cashflows on North platform – Originally launched in late 2007 as a guarantee product on a basic platform, North progressively upgraded to reach full wrap capabili
Slide 40: AMP Bank – capturing value from shifting customer preferences
AMP Bank – capturing value from shifting customer For personal use only preferences – 1H 12 operating earnings of A$29m (A$30m in 2H 11) reflect lower net interest margin (down 10 bps on 2H 11) – Return on capital of 13.4% in 1H 12, down from 15.2% in 2H 11 – Residential mortgage book up 8% on 2H 11
Slide 41: Financial overview – regulatory capital
Financial overview – regulatory capital For personal use only Regulatory capital resources above MRR of $2,046m, up $503m on FY 11 3000 Movements in Shareholder MRR(-A$159m) 2500 380 32 491 109 2,046 2000 (40) (21) 61 (63) (100) (35) (240) 662 1,543 (71) 1500 553 Movements in regulatory 1000 capital
Slide 42: Financial overview – composition of capital requirements
Financial overview – composition of capital requirements For personal use only Market risk Shareholder MRR A large for life statutory component of the Insurance risk funds (other than A$629m deferred shareholder MRR Operational risk acquisition costs) Shareholder and other currently relates surplus,
Slide 43: Financial overview – composition of capital requirements excluding deferred acquisition costs
Financial overview – composition of capital requirements For personal use only excluding implicit deferred acquisition costs Life Statutory Funds: Market risk Life Statutory Funds: Insurance risk Composition of Shareholder shareholder surplus MRR Life Statutory Funds: Operational A$1,113m A$1,384m a
Slide 44: Financial overview – drivers of increase in capital requirements under LAGIC
Financial overview – drivers of increase in capital For personal use only requirements under LAGIC Prudent capital Drivers of increase in life statutory funds minimum requirements under LAGIC management Illustrative purposes only means AMP well placed to manage impact of LAGIC Pre-LAGIC: Market, Inc
Slide 45: Regulatory outlook
Regulatory outlook For personal use only Stronger Super MySuper is a new – Legislating simple, low-cost default superannuation product and auto-consolidation of multiple superannuation low-cost, simple interests default – From 1 October 2013, default superannuation contributions will have to be paid