AMP chief executive officer Alexis George remains optimistic about the future of the financial services firm despite challenging economic conditions and a number of looming class actions.
In its half-year results released on Thursday, AMP reported that its underlying net profit after tax (NPAT) remained flat at $112 million while its statutory NPAT fell 44.3 per cent to $261 million.
The advice segment saw underlying NPAT losses of $25 million, though this was a 16.7 per cent improvement on the $30 million loss seen in 1H22. AMP added that its revenue per advice practice increased 10.3 per cent.
Speaking with ifa sister brand InvestorDaily, Ms George said she was confident about the outlook for AMP while noting the “difficult economic environment” that is affecting many of its customers.
“While interest rates look like they may be abating in terms of further increases, inflation looks like it’s slowed down, there’s still a lot of customers out there experiencing hardship,” she said.
“So I acknowledge that. I think we’ve prepared ourselves well for that, though. We really have tackled the cost problem. And we’ve made commitments today around cost.”
Among these commitments are a new business simplification program, which will target a $120 million reduction in AMP’s cost base by the end of the 2025 financial year.
“We’ve made sure that we’ve got a really strong balance sheet, which is important when you’re in that environment,” Ms George continued.
“I think we’ve started to rebuild our reputation and trust with our customers, but also with our advisers, and that’s something which is really important to do if we want to be successful.”
AMP recorded a $50 million provision in its half-year results in response to the Federal Court’s judgement in a class action related to changes made by AMP Financial Planning to its Buyer of Last Resort (BOLR) policy back in 2019.
The firm has elected to temporarily pause the third tranche of its $1.1 billion capital return program due to the uncertainty surrounding the class action as well as other litigation matters.
“We’ve done the best we can to estimate the cost of the judgement as we understand it today,” Ms George explained.
“But I want to stress, we just put our orders in yesterday, and the judge now – and believe me, this is a learning experience – the judge now has to consider the plaintiff’s orders, our orders, and then make final orders, and we expect that may occur this month, and then we’ll decide whether we do need to appeal on any aspects.”
As part of its results, AMP also noted that a hearing for a shareholder class action against it is due to commence in the Supreme Court of NSW on 21 August.
Additionally, there are two further “legacy” class actions against the firm, including a superannuation class action and a class action relating to commission for advice and insurance, but Ms George indicated that AMP could not yet determine what the impact of these may be.
“There’s four class actions out there. They’ve been out there for a long time. Two of those are not well defined as we sit here today, and I have no even dates,” she said.
“The third one, which is the shareholder class action, is due to start in a couple of weeks, we may get a better idea then. We’re probably going to fight that very hard.”
Looking at AMP’s North platform, it reported an underlying NPAT increase of 25.7 per cent over the first half of 2022 to $44 million. AMP said this was largely driven by an improved investment outcome from the North guarantee that was partly offset by lower AUM-based revenue, as well as spending to support business growth.
Inflows to North from independent financial advisers increased by 48 per cent, with a net cashflow of $741 million (excluding pension payments). Average assets under management (AUM) remained broadly in line with 1H22 at $67.3 billion, down slightly from $67.6 billion.
Ms George said that the North Lifetime retirement solution, which launched late last year, was a large contributor to the increased inflows.
“We needed to come up with something that was different and unique for us, and the retirement solution really was smack bang in our branding and our capability,” she said.
“By launching that retirement solution, it really gave us the opportunity to get back onto approved product lists of those independent advisers that we hadn’t been able to do for many years. So, as a result of that, we’ve really opened up a whole new network of supporters through those solutions.”
Any reputational rebuild, if there has actually been one, will stop when AMP appeals the BOLR decision that they recently lost comprehensively. They were found to have acted illegally and unconscionably by the court and if they try to fight this further then in simple terms – actions speak louder than words
North is good.
However the advice business is a bad joke with poor leadership and a disgraceful track record in its dealings with advisers.
Yes, on the surface, North is good, seemingly for clients BUT very good for the fund manager and administrator. The fees are horrendous. Just do the calcs on what a client with a nice even $1 mil in their fund will pay. Like so many of these ‘guaranteed’ super/retirement products i.e. Allianz Retire+ has great results and structure but, again, horrendous fees. Shame really, as the product without such high fees would be a real boon for clients.
North doesn’t have high fees at all – they are about the lowest – we did a full scan recently. Their lifetime product is very low cost too
Love to know with which products you are comparing. Lowest of the high-fee bad bunch perhaps? Lowest of similar kind? Still expensive compared with different other strategies utilizing, just for example, annuities. That capital guarantee doesn’t come for nothing.
I’m talking about their new ‘Lifetime retirement solution’ quoted in the article – 0.1% is a tiny fee for a lifetime income product
I agree, I believe North is a very well priced platform at present. However that’s all about to change come the 1st October.
I saw the new fees – still very well placed for my clients – maybe if you have a lot of rats and mice…
AMP can’t hope to rebuild it’s reputation with the advice community until they take ownership of their actions and make good on the damage they’ve done to so many small businesses.
AMP loves to talk up the increase in inflows from the IFA market. Maybe ask them does this include inflows from previous AMP aligned practices, like PSK. The real question is what is the inflow from new IFAs that have never used the North platform before.
Had to check if it was 1 April.
Tell them they’re dreaming. Never will an AMP product cross my doors.
blah blah blah
Pay out every last dollar owed to all AMP Advisers who exited or were forced to exit AMP under the appalling revision of the BOLR and under the appalling reign of former CEO Fransesco De Ferrari.
Do not fight this any longer & do not attempt to negotiate a beneficial outcome for AMP in relation to this matter.
Pay out every single AMP Adviser based on the multiple that was formally agreed to by both parties in good faith.
Only then will AMP have a glimmer of hope to begin to rebuild a brand that has been so demonstrably damaged through sheer corporate greed and via management who had such a soaring lack of empathy and understanding of the depth of the relationships and loyalty that existed it is unconscionable.
What about also paying them additional losses like asset value increases (family home, etc.) that had to be sold to pay the debt on purchased books of clients, loss of future earnings, medical costs caused by stress, etc.) Only then will AMP have a minor hope of restoring its’ reputation up from “Putrid” to “still on the nose”. They won’t. The $50m set aside is for an appeal cost.
To ‘Anonymous’, Thank you and best comment here so far, shame we don’t have your name as you deserve special thanks for encapsulating the situation perfectly. The only thing you don’t mention is some sort of recompense for the families of adviser suicides. No money can ever fix this of course but it would be good to see AMP fall on their sword and admit culpability on this. It may, at least, mean ‘something’ to the families left behind. Maybe, then, they could address the money owed to so many others as per your excellent comment above. Thank you.