AMP has reported an underlying net profit after tax (NPAT) of $112 million for the half-year ending 30 June, in line with its result for the first half of the previous financial year.
Statutory NPAT fell by 44.3 per cent to $261 million, which AMP said mainly reflected a gain of $209 million on the sale of its AMP Capital and SuperConcepts business during 1H23 and the $390 million gain on the sale of its infrastructure debt platform previously reported in 1H22.
AMP Bank delivered an underlying NPAT of $57 million, up 23.9 per cent on the previous corresponding period. Net interest income increased by 13.6 per cent while net interest margin rose by 7 basis points to 1.39 per cent.
AMP’s platforms business recorded a 25.7 per cent increase in underlying NPAT to $44 million, which was said to have been predominantly driven by an improved investment outcome from the North guarantee but partly offset by lower AUM-based revenue.
Meanwhile, the underlying NPAT loss of AMP’s advice business narrowed from $30 million in 1H22 to $25 million in 1H23, which AMP said reflected its ongoing focus on costs and scaling of practices to deliver efficiencies.
“The performance of our underlying businesses continues to improve, with AMP Bank achieving disciplined mortgage growth in a competitive environment, the North platform significantly increasing inflows from independent financial advisers, advice further reducing costs, and Master Trust operating more efficiently and delivering strong investment returns for members,” AMP chief executive officer Alexis George said in a statement.
The Master Trust business delivered an underlying NPAT of $28 million, up 7.7 per cent, while the underlying NPAT of the New Zealand wealth management business remained flat at $17 million.
According to Ms Alexis, reducing costs and improving efficiency will remain a key focus for AMP moving forward.
“Our FY23 costs are on target to be in line with FY22, and it’s important to note that to achieve this, we will absorb ~$50 million of additional costs due to inflation and stranded costs related to our sold businesses,” she said.
Subsequently, AMP has announced a new business simplification program that will target a $120 million reduction in its cost base by the end of the 2025 financial year, which is expected to require one off investment of $120 million to $150 million over next two years.
“This will be achieved through simplifying our technology architecture, removing stranded costs, reducing group costs including property, continued focus on the advice business, replatforming our Master Trust business and a disciplined approach to project spend,” said Ms Alexis.
“These cost initiatives are expected to reduce our cost-to-income ratio from the current 66.2 per cent to the low 60s, with cost efficiency to be a continued focus for the group.”
The firm noted that it had returned $610 million in capital to shareholders through a share buyback and dividends over the past 12 months. An additional $140 million will be returned by the end of October via an interim dividend of 2.5 cents per share and further share buybacks.
Meanwhile, the third tranche of AMP’s $1.1 billion capital return program has been temporarily paused due to uncertainty surrounding its financial adviser class action and other litigation matters. The firm has booked a $50 million provision in response to last month’s judgment.
“Given the current uncertainty around the court’s judgment and other litigation matters, we are taking a prudent approach with our capital and liquidity and will pause tranche three of the capital return,” Ms Alexis.
“We will review the decision to pause tranche three by no later than the end of the year. We remain committed to returning excess capital to shareholders and will not be engaging in large scale M&A activity in the near term.”
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.