In a trading update this morning, AMP said its Australian wealth management business experienced net cash outflows of $1.8 billion, including $538 million of regular pension payments, which it said reflected expected continued weakness in inflows and higher outflows in the post-royal commission environment.
AMP’s Australian wealth management AUM increased 5 per cent to $129.3 billion.
“Cash inflows of $4.69 billion, $1.3 billion lower than Q1 18, reflected reduced member contributions and slower inflows on North platform,” the group said.
“Cash outflows of $6.46 billion, up from $6.14 billion in Q1 18, included $538 million in regular pension payments made to AMP’s clients.”
Meanwhile, AMP Capital AUM increased 4 per cent to $194.6 billion, which the company said was primarily due to stronger investment markets.
“Net external cash outflows of $20 million reflected quarter-end liquidity management by China Life AMP Asset Management investors and fixed income redemptions,” AMP said.
“Net inflows in infrastructure strategies continue, supported by strong client demand and solid transaction pipeline.”
During Q1 19, AMP Capital confirmed the sale of its 50 per cent shareholding in the management companies of Singapore-listed AIMS AMP Capital Industrial REIT (AA REIT) to joint venture partner AIMS Financial Group.
As a result of this share sale, AMP Capital’s external AUM reduced by $765 million and AMP Capital will recognise a gain on sale in 2019. As part of the transaction, AMP Capital has also agreed to sell its 10.26 per cent principal stake in AA REIT units to AIMS Financial Group, which will settle in 2H 19.
AMP chief executive Francesco De Ferrari said the group’s focus during the first quarter has been on accelerating change within AMP, including establishing a new leadership team, progressing the remediation program and separating its life insurance businesses, and sharpening its offers to clients.
“Stronger investment markets delivered growth in assets under management in Australian and New Zealand wealth management and at AMP Capital,” he said.
“Cash flows in Australian wealth management continue to be challenged given the post-royal commission environment. AMP Bank is performing well, with strong retail deposit growth and a modest increase in lending, and AMP Capital continued its strength in real assets.
“We remain focused on transforming our business model in Australian wealth management to compete more effectively. Actions we’ve already taken to improve outcomes for customers include fee reductions on our MyNorth products, which builds on the MySuper fee cuts we delivered to clients in 2018. We’ll continue to modernise our products to put AMP in a position where we can win in the market.”
AMP Bank increased deposits by $218 million, with the most growth in retail deposits, while the total loan book also grew by $127 million to $20.1 billion.