AMP : full year 2021 investor report

FYINVESTOR REPORT21

Management and contact details

AMP executive committee

Alexis George	Chief Executive Officer
James Georgeson	Chief Financial Officer
Shawn Johnson	Chief Executive Officer, AMP Capital
David Cullen	Group General Counsel
Scott Hartley	Chief Executive Officer, Australian Wealth Management
Rebecca Nash	Chief People Officer
Sean O'Malley	Group Executive, AMP Bank
Phil Pakes	Group Chief Risk Officer
Blair Vernon	Chief Executive Officer, 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 FY 21
Contents
AMP	Business overview	2
	FY 21 performance summary	3
	Financial summary	4
AMP business unit results	AMP Bank	6
	Australian wealth management	9
	New Zealand wealth management	16
	AMP Capital	18
Group Office and related matters		24
Capital, debt and liquidity	Capital adequacy	26
	Regulatory capital requirements and capital management framework	27
	Debt and liquidity overview	28
Additional AMP group information	Sensitivities - profit and capital	29
	Market share and channel analysis	31
	AMP Capital investment performance	32
Glossary of terms	Accounting treatment, definitions and exchange rates	33

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.

The financials presented in the Investor Report represent the AMP structure of business units as at 31 December 2021. AMP Capital is reported pre demerger impacts, including the sale of the Global Equities and Fixed Income business (GEFI), sale of the Infrastructure Debt businesses and the transfer of the Multi Asset Group (MAG) business to Australian wealth management.

2 AMP

AMP Investor Report FY 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 four areas:

• AMP Bank
• Australian wealth management (including Platforms, Master Trust and Advice)
• New Zealand wealth management, and
• AMP Capital.

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

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 FY 21, AMP Bank helped around 161,900 clients with their banking needs and provided over 10,700 new home loans.

Australian wealth management (AWM)

AWM comprises of three different business lines providing advice, superannuation, retirement income and managed investments products:

• Platforms includes superannuation, retirement and investment products through which managed funds, managed portfolios, listed securities, term deposits and guarantee investment options can be accessed to build a personalised investment portfolio. The flagship North platform is an award-winning online wrap platform which continues to deliver on its commitment of strengthening and broadening investment choice for clients and providing a contemporary platform for advisers to manage their clients' funds.
• Master Trust offers the largest single retail superannuation product set in Australia (SignatureSuper) with around 850,000 customers. The highly rated SignatureSuper offer consists of three products across super and pension. The open investment menu caters to different risk profiles with exposure to a range of professional managers in order to meet the needs and goals of customers. The Master Trust business delivers high quality member services, with strong administration, contact centre and digital capabilities. It also has a proven pedigree in managing corporate super plans with complex and tailored benefit designs, including defined benefits.
• Advice provides professional services to a network of aligned and external financial advisers (EFAs). These advisers provide financial advice and wealth solutions to their clients, including retirement planning, investments and financing. In addition to supporting a network of professional advisers, the Advice business partners with a number of aligned advice businesses via equity ownership to support the growth and development of these businesses.

As at FY 21, Australian wealth management managed AUM of A$134.0b and made A$1.9b in retirement payments during the year.

New Zealand wealth management

New Zealand wealth management encompasses wealth management, financial advice and distribution businesses 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.

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. Subsequently, on 24 December 2021, AMP announced the further simplification of Private Markets with the sale of infrastructure debt, expected to complete Q1 22. The demerger of Private Markets will create two more focused businesses 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 Master Trust and Platform clients, will complete its transition to Australian wealth management prior to demerger, creating an end‑to‑end superannuation and investment platform business, with the transition of front office functions already complete.

Strategic partnerships

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

• 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.

On the 3rd of November 2021 AMP Limited announced it has agreed to the divestment of its 19.13% equity interest in Resolution Life Australasia (RLA) for a consideration of A$524m to Resolution Life Group. This is expected to complete by Q2 22.

AMP 3

AMP Investor Report FY 21

FY 21 performance summary

Key performance measures

• FY 21 NPAT (underlying) of A$356m increased 53% from
  A$233m in FY 20. This increase largely reflects the impact of stronger AMP Bank earnings (+38%), AMP Capital earnings (+18%), New Zealand wealth management earnings (+11%) and stronger investment income from Group Office, including contributions from CLPC and Resolution Life Australasia, partly offset by lower Australian wealth management earnings (-25%).
• FY 21 NPAT (statutory) loss of A$252m was impacted by items reported below NPAT including A$312m of impairment charges, reflecting a comprehensive review of the balance sheet, A$133m of transformation costs, A$78m of remediation and related costs and other one-off items.
• AMP Bank NPAT of A$153m increased by A$42m (38%) from FY 20 largely due to a A$26m release of credit loss provisions as a result of the improved macro-economic outlook since the impact of COVID-19 in FY 20. Net interest income increased A$8m (2%) with the total loan book A$1,479m (7%) higher than FY 20.
• AMP Bank's residential mortgage book increased to A$21.7b driven by competitive pricing and offers, consistent service and targeted growth in principal and interest loans across both owner-occupied and investment lending. Interest only lending represents 14%
  of the total book, down from 20% at FY 20, the result of active management in response to the market environment.
• Australian wealth management NPAT of A$48m declined 25% from FY 20 primarily due to impairments to the carrying value of Advice assets in 1H 21, lower revenue predominantly from the impact of repricing in Master Trust and Platforms, and the cessation of grandfathered remuneration, partly offset by lower variable and controllable costs from cost reduction initiatives.
• Australian wealth management net cash outflows were A$5.2b in FY 21, compared to net cash outflows of A$7.8b in FY 20. This was largely attributable to one-off impacts on FY 20, primarily A$1.8b from the loss of corporate mandates and A$1.8b outflows as part of early release of super (ERS) payments. FY 21 net cash outflows also included A$1.9b of regular pension payments to members.
• New Zealand wealth management NPAT of A$39m increased A$4m (FY 20 A$35m) primarily due to the rebound in investment markets and improved cost performance.
• AMP Capital NPAT of A$154m was up 18% from A$131m in FY 20 due to higher performance and transaction fees in FY 21 and higher seed and sponsor investment returns due to a partial recovery of COVID‑19 devaluations in certain asset classes and strong performance in some individual assets.
• AMP Capital external net cash outflows were A$12.8b, with
  A$4.6b of net cash outflows across real estate largely attributable to the exit of the AMP Capital Diversified Property Fund (ADPF) and A$6.9b net cash outflows across public markets.
• Investment income in FY 21 of A$102m reflects an increase of A$72m on FY 20, driven by improved returns on the group's cash investments, growth in CLPC earnings, and the contribution from Resolution Life Australasia (which was agreed to be sold on 3 November 2021).
• Underlying return on equity was 8.4% in FY 21.

Revenue drivers

• Total AUM and administration of A$248.2b1 in FY 21 decreased by A$6.3b (-2.5%) from FY 20 as net cash outflows outweighed positive market returns.
• AMP Bank's total revenue increased 3% for the period. The net interest margin increased 3 bps from FY 20 to 1.62%.
• Australian wealth management AUM increased 8% to A$134.0b in FY 21 from FY 20. However, FY 21 AUM based revenue of A$858m decreased 5% from A$907m in FY 20 due to pricing changes.
• Platform AUM increased A$7.9b (13%) in FY 21 driven by stronger investment market returns, with continued growth in AMP's flagship North platform offsetting outflows from legacy and external platforms. Platform AUM based revenue to AUM of 50 bps in FY 21 was down 6 bps from 56 bps in FY 20.
• Master Trust AUM was up A$2.0b (3%) in FY 21 driven by stronger investment market returns, offsetting the impact of net cash outflows. Master Trust AUM based revenue to AUM of 85 bps
  in FY 21 was down 8 bps from 93 bps in FY 20, driven by pricing changes as part of simplification (6 bps) and SFT impacts (2 bps).
• AMP Capital AUM decreased A$12.0b (6%) to A$177.8b in FY 21 from FY 20. Fee income decreased A$2m to A$709m in FY 21 primarily due to lower AUM and non-AUM fees.

Cost drivers

• AMP's controllable costs, excluding AMP Capital, of A$775m were 7% lower than FY 20 due to cost out benefits partly offset by structural cost increases, variable remuneration and reinvestment spend.
• AMP group cost to income ratio was 71.3% in FY 21, down from 75.5% in FY 20.
• Total controllable costs to average AUM decreased by 1 bp in FY 21 to 51 bps.
• AMP Bank cost to income ratio was 39.4% and in line with FY 20.
• Australian wealth management controllable costs decreased by A$34m (6%) from FY 20 to A$518m.
• AMP Capital cost to income ratio decreased 2.2 percentage points from FY 20 to 70.8% in FY 21 driven by lower costs. Controllable costs decreased by A$10m to A$515m in FY 21.

Capital position

• FY 21 total eligible capital resources were A$383m above target requirements, down from A$524m at 31 December 2020.
• The on-market share buy-back concluded on 30 June 2021, with the deployment of A$196m of capital to repurchase and cancel 170.5m2 shares.
• Tier 2 hybrid instruments of A$250m were internally restructured to be utilised as eligible capital resources.
• The board has resolved not to declare a final 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.

• Includes SuperConcepts assets under administration, refer to page 14.
  2 170,493,388 shares.