HY 20 Results
Today we have released AMP’s half year results for 2020 and provided a progress report on the implementation of AMP’s three-year transformation strategy.
The COVID-19 pandemic has been an unprecedented and challenging period for everyone. Supporting clients and our employees has been AMP’s priority in the first half of the year and this will continue. We have also continued the challenging task of transforming AMP to become a simpler, client-led, growth-oriented business. A major milestone of this transformation was completed on 30 June with the sale of the AMP Life business to Resolution Life.
Special dividend and buy-back
As foreshadowed, the Board have finalised how the net proceeds from the AMP Life sale will be returned to shareholders. Today we have announced the return of up to $544 million to shareholders through:
- A fully franked special dividend of $0.10 a share to be paid on 1 October 2020, and
- the return of up to $200 million via an on-market buy-back of AMP shares over the next 12 months, subject to market conditions.
The special dividend will be issued as a cash payment only. The dividend reinvestment plan (DRP) will not operate for the special dividend payment. Shareholders will receive a communication by email tomorrow providing further information about the special dividend.
While we are pleased to return this value to shareholders, the Board does not expect to pay a final 2020 dividend, which would typically be paid in March.
The COVID-19 pandemic had a major impact on AMP’s performance in 1H 20 as we disclosed in our Market Update announcement on 31 July. Underlying profit was $149 million for the half.
COVID-19 related market volatility has affected our assets under management in our Australian wealth management, AMP Capital and New Zealand wealth management businesses.
In Australian wealth management, our flagship wealth platform, North, has continued to grow with net cash inflows of $2.0 billion. Across all platforms, net cash outflows were $4.4 billion, however, pension payments ($1.2 billion) and losses of some corporate superannuation mandates ($1.3 billion), which we have flagged previously to investors, accounted for a significant share of outflows. We also returned more than $900 million to superannuation clients through the Government mandated early release of super scheme. Removing these factors, we have seen some early improvement in the underlying trends of our wealth management cashflows.
AMP Bank continued to grow its home mortgages and retail deposits in the first half, though the market is and will remain challenging.
We have supported clients with mortgage repayment deferrals through the uncertainty and our staff are working to assist clients who have deferred payments to get back on track. The bank booked a $24 million (post tax) credit loss provision in the light of the deteriorating macro-economic conditions as required under accounting standards. Overall our credit quality remains sound.
We remain focused on reducing costs. COVID-19 has led to higher costs in supporting clients, however, these were mostly offset by cost reductions in other parts of our business. Our management team remains committed to delivering our target of $300 million in annual cost savings by end of 2022.
The pandemic has not distracted AMP from making strong progress in delivering our transformational strategy.
The completion of the AMP Life sale will simplify our business. Having made the decision to retain the New Zealand wealth management business – we will work to develop and grow this business.
Strong progress is also being made in the transformation of the wealth management business in Australia, including delivering super and platform simplification and continuing to focus on building a more professional and productive advice network. AMP remains on track to complete its client remediation program in 2021 with 80 per cent of the program expected to be completed by the end of this year.
In addition, we have announced a new AMP Capital strategy which increases our focus on the significant growth opportunity in global private markets as it drives toward becoming a leading global real assets business while at the same time continuing to grow its differentiated public markets capability.
As part of our strategy we will also repurchase Japan’s Mitsubishi UFJ Trust and Banking Corporation’s (MUTB) 15 per cent shareholding in AMP Capital.
AMP remains well-capitalised with surplus capital of $1.4 billion at 30 June 2020; with net proceeds of $965 million attributable to the sale of AMP Life.
$400 million of capital will be used to fund the repurchase of MUTB’s 15 per cent shareholding in AMP Capital and up to $544 million will be returned to shareholders via the combination of the fully franked special dividend and on-market share buy-back. The remainder of surplus capital will be invested in AMP’s transformational strategy.
AMP has delivered significant milestones in the first year of its three-year transformation. The Board are cognisant that every action we take must reflect the long-term interests of you, our shareholders and owners of this business, as we work through our plan.
On behalf of the Board and management, we wish all our shareholders good health and safety during this time.
13 August 2020
Note: all amounts are in Australian dollars
Watch the live webcast by Francesco De Ferrari, CEO at 11am Sydney time: https://edge.media-server.com/mmc/p/b9sbiwux
A replay of this briefing will be available online after 2pm
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