Major institution cops multibillion-dollar losses

AMP’s Australian wealth management AUM dropped to $116.3 billion from $134.4 billion in Q4 2019, “primarily reflecting COVID-19-related market movements”, and saw net outflows of $1.3 billion. 

“Markets in Q1 were extremely volatile particularly in March, with significant falls in equities, fixed income and key commodities impacting our assets under management,” said AMP CEO Francesco De Ferrari. “We have seen some recovery since the quarter end, but expect market volatility to continue and the economic impact of the pandemic to emerge over the remainder of the year.”

Wealth outflows totalled some $7.7 billion, with the Protecting Your Super Legislation and “expected exit” of corporate super mandates impacting overall net cash outflows for the business by $230 million and $430 million respectively. AMP also paid out $563 million in regular pension payments to clients.

The remaining $5.9 billion of outflows went unaccounted for in the results, possibly reflecting the ongoing impacts of the reputational damage AMP suffered during the rRoyal commission. 

Outflows were slightly offset by strong inflows of $5.8 billion, especially on its North retail platform, which saw a 41 per cent increase in flows and $400 million from external advisers.

AMP Capital, the business’ investment arm, also saw AUM shrink by some $10.7 billion – another casualty of the coronavirus crisis. 

“AMP Capital saw strong external cash flows, particularly into fixed income products through our asset management partnership in China,” Mr De Ferrari said. “Our infrastructure teams are also seeing opportunities for further investment, particularly in infrastructure debt.”

AMP Bank’s loan book increased by $162 million to $20.8 billion. The bank is also offering to pause home loan repayments for three months, with the option of another three-month pause. 

“During this time of uncertainty, we have focused on supporting our clients whilst working to continue to execute on our strategy,” Mr De Ferrari said. “We’re responding to a record level of client enquiries for advice and support as people weigh up important financial decisions.”

“Amid the uncertainty, I’m pleased we are showing up strongly for our clients and demonstrating the resilience of our business.”