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AMP Capital, wealth cop billions in outflows

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AMP recorded around $3 billion in cash outflows from both the wealth and investment segments during the September quarter, as it continues to mull over breaking up the group in its portfolio review.

The investment arm, AMP Capital, saw $2.4 billion in total net cash outflows during the third quarter with $1.1 billion being lost externally, primarily from public markets products being drained, alongside the sale of the AMP Life business.

AMP Capital also saw $1.3 billion in net internal outflows, reflecting money moving out of the wealth management business.

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The division’s AUM decreased by 0.4 per cent quarter-on-quarter and average AUM decreased to $189.9 billion, compared to $191.9 billion in June.

The wealth management business saw net outflows of $1.95 billion, on par with the third quarter in 2019, when it had outflows of $1.94 billion.

But during the September quarter this year, total outflows added to $8 billion, although it included $692 million withdrawn through the early super scheme and $452 million in regular pension payments. AMP expects further outflows of around $450 million in the fourth quarter, from a lost corporate super mandate.

Inflows into wealth had been 16 per cent lower year-on-year, at $6 billion.

The wealth segment had seen its assets under management (AUM) increase by 0.3 per cent to $121.4 billion from the second quarter, as investment markets rebounded. Average AUM was up by 2 per cent to $122.1 billion.

AMP Bank on the other hand saw deposits increase by $52 million to $17 billion, while the total loan book decreased by $303 million to $20.6 billion during the quarter, falling under competitive market conditions and the economic impact of COVID.

The group indicated on Thursday morning that its portfolio review is progressing, parallel to its transformation strategy.

AMP chief executive Francesco De Ferrari said the business has performed through the challenges of COVID and a period of “internal change”.

During the last three months, it had a wave of executives leave, including former chair David Murray, as sexual harassment allegations against ex-AMP Capital CEO Boe Pahari were revealed.

“As we move into the second year of our three-year strategy, we are accelerating our business transformation, and continuing to mitigate our legacy issues including our client remediation program which remains on track to complete in 2021,” Mr De Ferrari said.

AMP’s on-market share buyback has remained on hold during the portfolio review.

The group recently signalled it would be overhauling the strategy for the New Zealand wealth business to mostly passive investment, with BlackRock leading the change.

The business saw its total AUM increase by 1.2 per cent to $11.8 billion in the third quarter from the prior three months. But it saw net cash outflows of $13 million, compared to $79 million being withdrawn in the prior corresponding period.

 

AMP Capital, wealth cop billions in outflows
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on sar[email protected].

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