Lender releases FY23 results and looks to diversify, reduce costs
AMP Bank has recorded a net profit after tax of $93 million for the 2023 financial year, down on its FY22 result of $103 million, reflecting subdued growth in its residential mortgage book.
The non-major bank’s FY23 results were released on Wednesday as part of the wider AMP results.
AMP Bank said underlying NPAT of $93m reflected the previously flagged compression in Net Interest Margin (NIM), which was 1.27% for FY23, compared to 1.38% for FY22.
“To respond to market conditions, during 2H 23 AMP Bank’s strategy pivoted to lower residential loan book growth given margin pressure experienced in mortgages and deposits,” the bank said in a statement to the ASX.
“Consequently the residential mortgage book experienced subdued growth of 1.7% for the year, 0.61x system.”
Controllable costs for the year were 1.5% lower at $133m, with momentum behind further cost reductions in FY 24.
The bank said 90+ day arrears of 0.62% reflected the quality of the loan book “amid the challenging economic environment”, compared to 0.70% for the broader industry.
“AMP Bank remains well provisioned, and continues to provide additional support to customers in hardship.”
In November, AMP Bank announced a partnership with UK-based Engine by Starling, to use its platform to bring a new digital bank offering to Australian small businesses market. The aim is to open a new revenue stream and diversify AMP Bank’s funding mix.
“To improve return on capital, AMP Bank’s strategic focus is on disciplined responses including nominal loan growth, diversifying and optimising funding and reducing costs,” the bank stated.
AMP CEO Alexis George (pictured above) said 2023 was a year of progress for AMP.
“We have repositioned the portfolio with the completion of the AMP Capital sales, built momentum in our cost-out program, and resolved a number of significant legacy legal matters,” George said.
“In addition, we have continued to reduce net debt, implemented further business simplification initiatives, invested in sustainable growth and returned surplus capital to shareholders.”
George said now that AMP was in a stronger position, it had a clear strategy focused on three areas.
“The first is to drive the profitability of our businesses, AMP Bank, Master Trust, Advice, Platforms and New Zealand,” she said. “The simplification program and investment we’ve undertaken across the portfolio is delivering positive outcomes for our customers and provides a foundation for sustainable growth.”
The second focus is efficient cost and capital management, “including delivering on our commitment to further simplify and right size our cost base, and diversifying our funding mix in AMP Bank”.
“We have a strong balance sheet, and remain focused on optimising capital – including returning surplus capital to shareholders where possible,” George said.
“The third is to build on our capabilities across the wealth value chain and large customer base to create new sources of revenue and lasting points of differentiation with customers. This includes building our digital capabilities, and developing new products.”
Other AMP results
Looking at the overall FY23 results for AMP, underlying NPAT was up 6.5% to $196m, compared to $184m in FY22.
Statutory NPAT of $265m (FY22 $387m) reflected the net gain of ~$245 million on sale of AMP Capital and SuperConcepts, partly offset by litigation and remediation related costs and transformation cost-out.
Other results are as follows:
- AMP reported controllable costs of $744m, which had improved with a cost reduction program targeting $120m reduction in cost base by the end of FY25.
- Capital management: $750m of capital returned to shareholders since August 2022
- $350m tranche 3 capital return to progress with combination of FY23 final dividend (totalling $55m), further dividends and/or an on-market share buyback of up to $295m
- Net debt reduction of $337m in FY23
- Underlying earnings per share of 6.8c for the period (up 19.3% on FY22
- Final dividend of 2c per share declared, 20% franked
Platforms
Platforms returned an underlying NPAT of $90m (FY22, $65m), reflecting positive North Guarantee movement from favourable market conditions. IFA flows up 33%,
Advice
There was an underlying NPAT loss of $47m in Advice, an improvement of 30.9% on FY22
Group
The Group recorded an underlying NPAT loss of $27m (FY22, $1m NPAT loss). AMP said this reflected lower strategic partnership earnings, with PCCP sponsor valuations impacted by US real estate markets, and regulatory changes impacting China partnership earnings relative to FY22.
In addition, stranded costs of $20m from M&A transactions emerged in FY 23.
Mike Hirst appointed as new AMP chair
On the same day AMP released its FY23 results, it also announced to the ASX that AMP Limited chair Debra Hazelton would retire from the AMP Board at the conclusion of this year’s annual general meeting on April 12.
AMP Limited non-executive director Mike Hirst will succeed Hazelton as the new AMP Limited Chair.
Hazelton is stepping down after almost five years as a non-executive director on the board and after serving as chair of AMP Limited since August 2020. She was also a non-executive director of the AMP Capital Board from 2018 to 2022.
AMP said as chair, Hazelton had steered the company through a successful transformation, including the stabilisation of the business through improvement in culture and governance, renewal of the executive leadership team, portfolio simplification and strategic reset, and the return of over $750m million in capital to shareholders accompanied by a disciplined cost control program.
“During my tenure as chair, AMP has undergone a significant transformation to set the company up for a sustainable future,” Hazelton said.
“We have a strong chief executive officer and management team in place, the board has been renewed, the business is repositioned, the strategy reset, the AMP portfolio is simplified, the capital base is strong, and substantive legacy issues are resolved.
“I believe now is the right time for me to hand over to Mike Hirst, as the company embarks on a new chapter focused on growing as a retail bank and leading wealth manager in Australia and New Zealand.”
Hirst, who is currently an independent non-executive director of the AMP Limited Board and chair of its risk and compliance committee, brings more than 40 years of board and executive experience to the chair position, including nine years as CEO of Bendigo and Adelaide Bank, and senior executive roles across banking and financial services.
“I would like to thank Debra for the enormous contribution she has made to AMP, and the strong leadership she has shown during a transformative period for the business,” Hirst said.
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