Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NPAT increased by 4.5% to $118 million, indicating strong business performance.
- Costs reduced by nearly 6.5%, showing effective cost management.
- EPS earnings are up, leading to a $0.02 per share dividend, 20% franked.
- Successful capital return program with $963 million returned from buyback, nearing the $1.1 billion target.
- Debt reduction efforts have been successful, helping maintain credit ratings.
Negative Points
- Revenue down 4% compared to H1 2023, primarily due to NIM contraction in the Bank.
- Statutory NPAT down to $103 million, impacted by previous gains on AMP capital transactions.
- The Advice business continues to operate at a loss, with a $30 million accounting loss expected from the sale.
- Increased arrears in the Bank's credit quality metrics, indicating potential future risks.
- Continued competitive pressure in the deposit market affecting net interest margins.
Q & A Highlights
Highlights of AMP Ltd (AMLTF, Financial) Earnings Call Transcript
Q: Can you explain the expected increase in controllable costs in the second half despite your cost-saving initiatives?
A: We typically see second-half seasonality due to salary changes and marketing spend. The increase is more moderate than in previous years, and we are making small investments to drive growth, particularly in the platforms business.
Q: Why do you expect growth in the bank's second half, and are you willing to reduce margins to achieve this?
A: We have focused on margin over volume in the first half, but we see opportunities for growth in specific segments like self-employed individuals and self-managed super funds without significantly compromising margins.
Q: How did the PCCP investment values improve despite challenging market conditions?
A: The improvement was in our seed investment, which is diversified across industrial and commercial developments, not just office properties.
Q: What changes have you made to improve flows in the North platform and IFA network?
A: We launched innovative retirement solutions, which opened new relationships and improved flows. The new partnership with Entireti and their dealer groups also presents opportunities for North.
Q: How should we think about future capital returns after completing the current buyback program?
A: We aim to move to a more formal dividend policy and business-as-usual capital management. While we don't plan a secondary buyback in the short term, we will reassess our capital position at the end of the financial year.
Q: Can you provide more details on the $30 million accounting loss on the sale of the advice business?
A: The loss includes legal and transaction costs, separation costs, incentives for advisors, and provisions for known issues. The consideration for the licensee business is around $10 million.
Q: Are there any trends in the bank's arrears increase?
A: The increase is across the book, particularly when customers roll off fixed to variable rates. However, the overall credit quality remains positive, and we are monitoring unemployment numbers closely.
Q: What are the implications of the new SME banking initiative on costs and NIMs?
A: The costs are included in our simplification program, and we expect to see the benefits of the initiative starting in 2026. The impact on NIMs will be clearer as we progress through the year.
Q: What exposure does AMP have to the advice segment after the transactions?
A: We will maintain intra-fund and salaried advice within Super and hold a 30% stake in the licensee business. We have accounted for known liabilities and small remediations.
Q: How do you plan to manage the potential disruption to client money on AMP platforms due to the advice business divestment?
A: We have put measures in place to ensure a smooth transition for advisors, including rebates and continuity with Matt Lawler as CEO of the new entity. While there is no guarantee, we have done everything possible to protect the business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
