AMP’s Capital Strength Tested as Superannuation Faces Net Outflows

Overview of AMP’s FY24 Financial Performance

AMP Limited’s FY24 Data Pack, released on 14 February 2025, provides a comprehensive view of the company’s financial health and operational performance across its key business units. The data pack, while unaudited, offers valuable insights into AMP’s underlying net profit after tax (NPAT), revenue streams, capital adequacy, and market positioning as the company navigates a challenging economic environment.

Despite a backdrop of market volatility and sector headwinds, AMP reported an underlying NPAT of $236 million for FY24, marking a 15.1% increase compared to the previous year. This growth reflects the company’s strategic focus on core wealth management and banking operations, alongside disciplined cost management.

Banking Division: Stability and Capital Strength

AMP Bank contributed $72 million to the group’s NPAT, supported by a net interest margin of 1.26% and a robust capital adequacy ratio of 15.6%. The bank’s total loans remained steady at $23.3 billion, with a deposit base of $20.5 billion, maintaining a healthy deposit-to-loan ratio. Importantly, loan impairment expenses remained minimal, underscoring prudent risk management amid economic uncertainties.

The bank’s liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) stood comfortably above regulatory requirements at 136% and 141%, respectively, reinforcing AMP Bank’s resilience. The cost-to-income ratio improved slightly, reflecting ongoing efficiency initiatives.

Platforms Segment: Positive Cashflows and Margin Expansion

The Platforms business delivered a NPAT of $107 million, buoyed by net cash inflows of $2.8 billion and an average assets under management (AUM) of approximately $79.8 billion. The segment’s AUM-based revenue margin held steady at 45 basis points, while cost control measures helped maintain a cost-to-income ratio of 52.5%.

Cash inflows were driven by strong member and employer contributions, alongside transfers and rollovers. The Platforms division’s diversified asset allocation, with balanced exposure to cash, equities, and fixed interest, contributed to stable revenue generation despite market fluctuations.

Superannuation & Investments: Navigating Net Outflows

The Superannuation & Investments unit reported a NPAT of $67 million, with an average AUM of $56.8 billion. While the segment experienced net cash outflows of $1.0 billion, investment income and operational efficiencies helped mitigate the impact. The AUM-based revenue margin remained robust at 63 basis points, reflecting the value of AMP’s investment management capabilities.

Cost-to-income ratios remained elevated at 63.9%, highlighting ongoing investment in technology and regulatory compliance. The segment’s asset allocation favored international equities and property, positioning it for potential growth as market conditions improve.

New Zealand Wealth Management: Steady Growth and Market Position

AMP’s New Zealand Wealth Management division posted a NPAT of $51 million, supported by net cash inflows of $150 million and an AUM of $11.8 billion. The division maintained a strong return on tangible equity (ROTE) of 40%, with a cost-to-income ratio of 74%, reflecting continued investment in growth initiatives.

Market share data indicates AMP’s solid positioning in New Zealand’s wealth management sector, with steady contributions from both wealth management and KiwiSaver products. The division’s diversified revenue streams and disciplined cost management underpin its stable performance.

Group Capital and Debt Profile

AMP’s group capital adequacy remains sound, with Common Equity Tier 1 (CET1) capital at $962 million and a surplus capital buffer of $33 million. Corporate gearing stood at a conservative 12%, supported by $750 million in subordinated debt and $1.1 billion in senior debt. Interest cover ratios remain healthy, providing confidence in AMP’s ability to service its debt obligations.

The company’s capital management strategy, including an on-market share buyback of 209 million shares, reflects a commitment to shareholder value amid a cautious economic outlook.

Looking Ahead: Strategic Focus and Market Dynamics

AMP’s FY24 results underscore a resilient business model focused on wealth management and banking, with disciplined cost control and capital management. However, net cash outflows in superannuation and investments signal ongoing challenges in client retention and market competition.

Investors will be watching how AMP leverages its platform scale, enhances digital capabilities, and navigates regulatory changes to sustain growth. The company’s ability to adapt to evolving market conditions while maintaining capital strength will be critical in the coming years.