AMP Limited (ASX: AMP; ADR: AMLYY) today reported cashflows and assets under management (AUM) for the first quarter to 31 March 2017 and provided an update on its Australian wealth protection business.

• Q1 17 Australian wealth management inflows increased 11 per cent from Q1 16 to A$6.4  billion. This was offset  by a 19 per cent increase in outflows resulting in net cash outflows of A$199 million.
• Outflows primarily driven by increased consolidation activity across the superannuation sector and as customers transitioned to MySuper.
• Net cashflows on AMP retail platforms were A$188 million in Q1 17.  North continues to perform well, with net cashflows up 27 per cent from Q1 16.
• AMP Capital net external cashflows of A$228 million driven by strong cashflows from China Life AMP Asset Management.
• AMP Bank's mortgage book grew by 5 per cent over the quarter.
• Positive Q1 17 Australian wealth protection claims and  lapse experience, with the business performing in line with revised assumptions.
• Cashflows strong since beginning of Q2 with wealth management net cashflows now positive year to date.

AMP Chief Executive Craig Meller said:

"Q1 17 cashflows reflect an extraordinarily high level of activity across Australia's superannuation industry as customers transitioned to MySuper prior to 1 July 2017, consolidate their funds and  allocate more investments to SMSFs, amid a changing regulatory environment.  As a result, both Australian wealth management cash inflows and outflows were higher.

"Cashflows into North increased, reflecting our continued investment in the market leading platform. AMP's SMSF business, SuperConcepts, also increased its assets under administration as it builds on its market-leading position.

"Wealth management cashflows have been strong since the beginning of Q2 as we near the 1 July 2017 effective date for superannuation contribution changes and from the transition of a large corporate super mandate to AMP.  Final MySuper transitions were completed in April and net cashflows in wealth management are positive for the year to date.

"Q1 claims and lapse experience in Australian wealth protection indicate that the measures we've taken to stabilise the performance of the business are working."

Commentary

Australian wealth management

Australian wealth management net cash outflows were A$199 million during the quarter, down from net cashflows of A$209 million in Q1 16.  While cash inflows increased 11 per cent from Q1 16, they were more than offset by a 19 per cent increase in outflows.  The decline in net cashflows was driven by increased superannuation consolidation across the industry, the migration of default funds to MySuper, fewer corporate super mandate inflows and increased outflows to self-managed super funds (SMSFs).

Superannuation outflows increased by A$278 million (24 per cent) on last year driven by increased competitor consolidation activity and higher outflows as customers transitioned to MySuper. Higher outflows to SMSFs were driven, in part, by customer preference for residential property  investment.

Inflows were up A$652 million (11 per cent), with member contributions up 25 per cent on Q1 16 continuing the trend experienced in Q4 16.  Superannuation consolidation inflows of A$129 million were up 42 per cent on Q1 16.

Net cashflows on AMP retail platforms were A$188 million in Q1 17, down from A$274 million in Q1 16, driven by higher superannuation outflows in legacy products.

North net cashflows grew by A$218 million (27 per cent) to A$1,038 million in Q1 17.  Cash inflows increased by A$956 million (41 per cent) to A$3,270 million, driven by continuing preference for customers to use North following the launch of MyNorth late in Q1 16.  Externally sourced inflows were up 34 per cent on Q1 16. North AUM grew 6 per cent in the quarter to A$28.7 billion and was up 35 per cent from A$21.2 billion at the end of Q1 16.

AMP Flexible Super reported net cash outflows of A$109 million in Q1 17, down from net cashflows of A$84 million in Q1 16, driven by increasing preference for North by new and existing retirement customers.  Flexible Super AUM grew 1 per cent in the quarter to A$16.1 billion and was up 8 per cent from A$14.9 billion at the end of Q1 16.

In Flexible Lifetime Super (superannuation and pension), which was closed to new business from 1 July 2010, net cash outflows increased by A$104 million from Q1 16 to A$380  million, driven by increased competitor consolidation activity and higher outflows as customers transitioned to MySuper.

Corporate superannuation net cash outflows were A$2 million in Q1 17 compared to net cashflows of A$109 million in Q1 16. There were no large mandate transitions during the quarter  (Q1 16 A$79 million), however a major mandate with WaterCorp has transitioned in Q2 17.

External platform net cash outflows were A$385 million in Q1 17 driven by higher outflows on investment products and lower platform inflows as advisers continue to use North as the preferred platform.

Total Australian wealth management AUM was A$122.8 billion at 31 March 2017, up 2 per cent from A$120.8 billion at the end of Q4 16 (and 9 per cent from A$112.6 billion at Q1 16).  The increase since 31 December largely reflects positive investment market movements during the quarter.  Average AUM was A$121 billion in the quarter.

AMP's SMSF business, SuperConcepts, added approximately 3,600 funds across administration and software services during Q1 17. It now supports more than 57,100 SMSFs (an increase from approximately 38,400 in Q1 16) with AMP providing professional administrative services to 34 per cent of these funds.  Assets under administration were A$22.5 billion at the end of the first quarter, an increase of A$111 million. The growth in the number of funds, which are not included in AUA, are mainly attributed to the acquisition of BPO Connect's SMSF business.  

AMP Capital

AMP Capital had net cash outflows in Q1 17 of A$625 million, comprising external net cashflows of A$228 million offset by internal net cash outflows of A$853 million. Internal cashflows were impacted by outflows from default super funds sourced via Australian wealth management.  External net cashflows again benefited from strong flows from China Life AMP Asset Management (CLAMP) and Infrastructure Debt Fund III fundraising.

Net cashflows from AMP's share of the CLAMP alliance increased to A$314 million up from A$22 million in Q1 16. In Japan, net cashflows of A$83 million were assisted by institutional flows into AMP Capital's global debt and equity infrastructure funds.  

AMP Capital AUM at the end of Q1 17 was A$165.7 billion, up 0.2 per cent from A$165.4 billion at end of Q4 16 and up 6 per cent from A$156.5 billion at Q1 16.  Average AUM increased 2 per cent over the quarter to A$165.2 billion.

AMP Bank

AMP Bank's mortgage book increased to A$17.9 billion at the end of Q1 17 from A$17.1 billion at Q4 16. Both the AMP aligned adviser and mortgage broker channels experienced mortgage book growth in Q1 17.  The deposit book increased A$617 million (5 per cent) in Q1 17 relative to December 2016.

Australian wealth protection

Australian wealth protection annual premium in-force was down 1 per cent in Q1 17 to A$1,943 million compared to A$1,964 million in Q4 16. The small decline was primarily driven by a 1 per cent fall in API for individual lump sum. Q1 17 claims and lapse experience was positive, with the business performing in line with revised assumptions.

New Zealand financial services

AMP New Zealand financial services' net cashflows of A$23 million in Q1 17 were down A$37 million from A$60 million in Q1 16, driven by increased outflows in both KiwiSaver and Other, partially offset by stronger inflows. 

Australian mature

Australian mature net cash outflows in Q1 17 were A$335 million, compared to a net cash outflow of A$319 million in Q1 16.