But its bank's residential book grows $705 million
AMP’s profit has fallen by almost a quarter amid what the Australian wealth manager said was a challenging economic backdrop.
In its half-year results for the six months ended June 30 released on Thursday, AMP reported an underlying net profit after tax (NPAT) of $117 million. Profit was down 24.5%, from $155 million in the first half of 2021.
AMP Bank’s underlying net profit after tax fell by 45.2% to $46 million, compared to $84 million the same time last year.
The bank’s residential mortgage book reached $22.4 billion in the first half-year, achieving growth of $705 million, representing 1.15 times system (a measure that considers the total banking system for the period).
Owner-occupiers accounted for 68% of the bank’s mortgage book, which showed an average loan-to-value ratio (LVR) of 66% – slightly – below 67% a year ago.
The net interest margin for its banking division fell to 1.32%, down from 1.62% a year earlier as mortgage margin compression and growth of fixed rate loans weighed on the results.
Margins started to improve in the second quarter of the year, following increasing interest rates as a result of cash rate rises, and a focus on optimising deposit and funding costs, AMP said.
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AMP chief executive Alexis George (pictured above) said the first half of the year had seen a “challenging economic backdrop”.
Despite a decline in investment markets, the business was well positioned, with a robust balance sheet that would assist to drive the business forward through a period of continued economic uncertainty, she said.
AMP’s balance sheet was further strengthened with the sale of assets, including its infrastructure debt platform and its remaining stake in Resolution Life Australasia, she said.
Commenting specifically on AMP’s banking division, George said AMP Bank remained a strong market competitor.
“AMP Bank continues to show its competitive strength as a digitally-enabled challenger bank with above system mortgage growth, while maintaining disciplined focus on credit quality,” George said.
“We have had a controlled launch of our new digital mortgage with a full roll out later in 2022, which will enable unconditional mortgage approval in as little as ten minutes.”
AMP Bank total deposits were $20 billion, having grown by 12% on the same time last year, with the majority of flows coming from customer deposits. Deposit to loan ratio increased to 88%, compared to 81% in the first half of 2021, AMP said.
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Total assets under management held by its Australian wealth management business were $126.3 billion, down from $142.3 billion, which AMP said primarily reflected negative investment market returns.
The company reported net cash outflows of $1.9 billion, a reduction from $3.6 billion the same time last year.
Surplus capital was $1.5 billion above total board requirements as of June 30, AMP said.
In line with prior guidance, AMP did not declare an interim dividend. However, as a result of its capital position and simplification of the business, AMP said it would return $1.1 billion of capital to shareholders.
This would include an immediate on-market share buyback of $350 million, with a further $750 million of capital returns planned in FY23 (subject to regulatory and shareholder approval).
