AMP : 1H 21 Investor Report

1HINVESTOR REPORT21

Management and contact details

AMP executive committee

Alexis George	Chief Executive Officer
James Georgeson	Chief Financial Officer
David Cullen	Group General Counsel
Scott Hartley	Chief Executive Officer, AMP Australia
Shawn Johnson	Chief Executive Officer, AMP Capital
Helen Livesey	Group Executive, People and Corporate Affairs
Phil Pakes	Chief Risk Officer
Blair Vernon	Chief Executive, New Zealand Wealth Management

Investor relations
Jason Bounassif	Group Treasurer and Investor Relations
Telephone	61 2 9257 9684
Email	[e-mail]
Michael Vercoe	Head of Institutional, Investor Relations
Telephone	61 2 9257 4244
Email	[e-mail]

Online reports

This Investor Report is available online at amp.com.au/shares along with other investor relations information.

Authorised for release by the AMP Limited Board.

AMP Limited

ABN 49 079 354 519

	Contents	1
	AMP Investor Report 1H 21
Contents
AMP	Business overview	2
	1H 21 performance summary	3
	Financial summary	4
AMP business unit results	AMP Australia
	Australian wealth management	6
	AMP Bank	12
	AMP Capital	15
	New Zealand wealth management	20
Group Office and related matters		22
Capital, debt and liquidity	Capital adequacy	24
	Regulatory capital requirements and capital management framework	25
	Debt and liquidity overview	26
Additional AMP group information	Sensitivities - profit and capital	27
	Market share and channel analysis	29
	AMP Capital investment performance	30
Glossary of terms	Accounting treatment, definitions and exchange rates	31

Important general notes

This Investor Report provides financial information reflecting results after income tax, unless otherwise indicated, for AMP shareholders. Information is provided on an operational basis (rather than a statutory basis) to reflect a management view of the businesses and existing structures. Content is prepared using external market data and internal management information. This Investor Report is not audited.

Profit attributable to shareholders (NPAT statutory) of AMP Limited has been prepared in accordance with Australian Accounting Standards.

Forward looking statements in this Investor Report are based on management's current views and assumptions. The assumptions involve known and unknown risks and uncertainties, many of which are beyond AMP's control and could cause actual results, performance or events to differ materially from those expressed.

These forward looking statements are not guarantees or representations of future performance, and should not be relied upon.

This Investor Report is not an offer document and therefore has not been the subject of a full due diligence process typically used for an offer document. While AMP has sought to ensure that information in this Investor Report is accurate by undertaking a review process, it makes no representation or warranty as to the accuracy or completeness of any information or statement in this Investor Report. In particular, information and statements in this Investor Report do not constitute investment advice or a recommendation on any matter, and should not be relied upon. Past performance is not a reliable indicator of future performance.

AMP also provides statutory reporting prescribed under the Corporations Act 2001. Those accounts will be available from AMP's website amp.com.au.

2 AMP

AMP Investor Report 1H 21

Business overview

Overview of the AMP group

AMP is a leading wealth management company in Australia and New Zealand.

The AMP group's business is divided into three areas:

• AMP Australia (wealth management and bank)
• AMP Capital, and
• New Zealand wealth management.

AMP also holds a number of important strategic partnerships at group and at business unit level.

AMP Australia

AMP Australia aims to help Australians to manage and grow their wealth throughout their lives.

In November 2019, AMP brought together its Australian wealth management and AMP Bank divisions under one leadership team.

Australian wealth management (AWM)

Wealth management provides financial advice services (through aligned and owned advice businesses), platform administration (including SMSF), unit linked superannuation, retirement income and managed investment products.

AMP Bank

AMP Bank offers residential mortgages, deposits and transactional banking. The Bank continues to focus on growth through investing in technology to streamline the origination process, improving the experience for both customers

and intermediaries.

As at 1H 21, Australian wealth management managed AUM of

A$131.2b, paid out A$1.0b in retirement payments, and AMP Bank helped around 116,400 clients with their banking needs and provided over 4,500 new home loans.

AMP Capital

On 23 April 2021, following the conclusion of AMP's portfolio review, AMP announced the intention to demerge AMP Capital's Private Markets business, consisting of infrastructure equity, infrastructure debt and real estate. The demerger will create two more focused businesses in AMP Limited and Private Markets, better equipped to pursue and allocate capital to distinct growth opportunities and realise efficiencies.

As part of the demerger preparations, on 8 July 2021, AMP announced the sale of its global equities and fixed income business (GEFI), which is expected to complete by Q1 22.

The remaining AMP Capital public markets business, the Multi‑Asset Group, which is responsible for asset allocation on behalf of AMP's superannuation clients, will transition over to AMP Australia prior to demerger, creating an end-to-end superannuation and investment platform business.

New Zealand wealth management

The New Zealand wealth management business encompasses the wealth management, financial advice and distribution business in New Zealand.

It provides clients with a variety of wealth management solutions including KiwiSaver, corporate superannuation, retail investments, a wrap investment management platform and general insurance.

Strategic partnerships

AMP group and business units hold a number of strategic partnerships including:

• 19.13% equity interest in Resolution Life Australasia
• 19.99% of China Life Pension Company (CLPC)
• 14.97% of China Life AMP Asset Management Company Limited (CLAMP), and
• 24.90% in US real estate investment manager, PCCP.

AMP 3

AMP Investor Report 1H 21

1H 21 performance summary

Key performance measures

• 1H 21 NPAT (underlying) of A$181m increased 57% from A$115m in 1H 20. This increase largely reflects the impact of stronger AMP Bank earnings (+76%), stronger investment income from Group Office, including contributions from CLPC and Resolution Life Australasia, partly offset by lower AMP Capital earnings (-19%) and Australian wealth management earnings (-17%).
• Australian wealth management NPAT of A$48m declined 17% from 1H 20 primarily due to impairments to the carrying value of equity investments in Advice, lower revenue predominantly from the impact of legislative and pricing changes, partly offset by lower variable and controllable costs from cost reduction initiatives.
• Australian wealth management net cash outflows were A$2.7b in 1H 21, compared to net cash outflows of A$4.0b in 1H 20. The improvement in net cash outflows was largely attributable to one-off impacts on 1H 20, including the A$1.3b loss of corporate mandates and A$0.9b outflows as part of early release of super (ERS) payments.
• AMP Bank NPAT of A$88m increased by A$38m (76%) from
  1H 20 largely due to a A$12m release of credit loss provisions as a result of the improved macro-economic outlook since the impact of COVID-19 in 1H 20, a return to more stable funding conditions and a reduction in excess liquidity. Net interest income increased A$8m (4%) with the total loan book A$45m (0.2%) higher than 1H 20.
• AMP Bank's residential loan book grew A$431m (4.3% annualised growth) from FY 20 in a highly competitive lending environment. In 2H 21, AMP Bank will leverage the strong momentum in 1H 21, with the applications pipeline increasing by more than 40% between January and June 2021. Total deposits at 1H 21 were broadly stable, increasing by A$10m (0.1%) from FY 20, in line with the Bank's strategy to optimise funding mix.
• AMP Capital NPAT of A$61m was down 19% from A$75m in
  1H 20 due to a one-off recognition of A$20m of performance fee revenue in 1H 20 not repeated in 1H 21 and lower performance and transaction fees reflecting earnings variability as the business transitions to closed-end funds.
• AMP Capital external net cashflows were A$6.7b, with A$3.7b of net cash outflows across real estate largely attributable to the exit of the AMP Capital Diversified Property Fund (ADPF) and A$2.9b net cash outflows across public markets.
• New Zealand wealth management NPAT of A$20m increased A$2m (1H 20 A$18m) from stronger investment markets and cost discipline offsetting the impact from compression associated with product repricing.
• Investment income in 1H 21 of A$57m reflects an increase of A$48m on 1H 20, driven by improved returns on the group's cash investments, growth in CLPC earnings, including receipt of AMP's first cash dividend, and the contribution from Resolution Life Australasia.
• Underlying return on equity was 8.3% in 1H 21.

• Includes SuperConcepts assets under administration, refer to page 10.
  2 170,493,388 shares.

Revenue drivers

• Total AUM and administration of A$256b1 in 1H 21 increased by A$1b (0.4%) from FY 20 as positive market returns outweighed negative net cashflows.
• Australian wealth management AUM increased 6% to A$131.2b in 1H 21 from FY 20. 1H 21 AUM based revenue of A$447m decreased 5% from A$470m in 1H 20 due to the cessation of grandfathered remuneration, Successor Fund Transfer (SFT) migration and pricing changes.
• AMP Bank's total revenue increased 3% for the period. The net interest margin increased 8 bps from 1H 20 to 1.71%.
• AMP Capital AUM decreased A$2.2b (1%) to A$187.6b in 1H 21 from FY 20. Fee income decreased 16% to A$327m in 1H 21 primarily due to lower AUM and lower performance and transaction fees.

Cost drivers

• AMP's controllable costs, excluding AMP Capital, of A$387m were 6% lower than 1H 20 due to cost out benefits partly offset by structural cost increases, variable remuneration and reinvestment spend.
• AMP group cost to income ratio was 71.2% in 1H 21, down from 73.5% in 1H 20.
• Total controllable costs to average AUM has increased by 1 bp in 1H 21 to 51 bps, also driven by lower revenues.
• Australian wealth management controllable costs decreased by A$13m (5%) from 1H 20 to A$233m.
• AMP Bank cost to income ratio was 31.7%, down from 33.1% in 1H 20, due to higher revenues.
• AMP Capital cost to income ratio increased 6.8 percentage points from 1H 20 to 75.2% in 1H 21 due to lower revenue. Controllable costs decreased by A$2m to A$252m in 1H 21.

Capital position

• 1H 21 total eligible capital resources were A$452 million above target requirements, down from A$521m at 31 December 2020.
• The announced on-market share buy-back of up to A$200m is now complete, concluding on 30 June 2021, with the deployment of A$196m of capital to repurchase and cancel 170.5m2 shares.
• The board has resolved not to declare an interim 2021 dividend. The board continues to maintain a conservative approach to capital management to support the transformation of the business. The capital management strategy and payment of dividends will be reviewed following the completion of the demerger in 1H 22.