AMP's wealth management business sees major outflows

AMP’s Australian Wealth Management (AWM) saw a reduction in net cash outflows from $2 billion in the first quarter of last year to $1.3 billion in the first three months of 2022, the company said in an ASX listing on Thursday.

Coupled with lower investment markets, the hefty net cash outflows influenced a $5.8 billion drop in the wealth division’s AUM to $136.5 billion.

AMP noted that while underlying cashflow trends continue to improve, the conclusion of AMP’s mandate as Woolworths’ corporate super provider is expected in the first half of 2023, and will generate an additional one-off impact of approximately $4 billion in cash outflows.

AMP Capital also suffered sizable net cash outflows of $1 billion reflecting asset divestments in closed-end infrastructure equity funds, alongside client redemptions from China Life AMP Asset Management (CLAMP) money market funds. 

AMP Capital’s AUM of $52.5 billion in the first three months of the year compared to $177.8 billion in Q421, reflecting the completion of the sale of the Global Equities and Fixed Income (GEFI) business to Macquarie Asset Management, the sale of the infrastructure debt platform to Ares and the transfer of the Multi-Asset Group (MAG) to Australian Wealth Management, which all concluded in Q122.

In total, $125.0 billion in AMP Capital AUM was transferred during Q122 with these transactions.

Last month, AMP officially offloaded its AMP Capital asset management arm, making its pivot to banking and wealth management.

“We’re seeing positive signs of growth and momentum and have set a clear path to accelerate the transformation of AMP Limited with the announcement of the sale of Collimate Capital’s real estate and infrastructure equity businesses, enabling an increased focus on the growth of our retail banking and wealth businesses,” said AMP chief executive Alexis George. 

“Our investments in technology to simplify and improve the lending experience has supported AMP Bank to deliver strong growth in a very competitive market, while also supporting customers to own their own home and invest in property,” Ms George added.

AMP Bank recorded a more successful first quarter, growing at twice the system growth with the total loan book increasing $0.5 billion to $22.6 billion in what AMP termed a “highly competitive market”.

Total deposits increased by $1.7 billion to $19.5 billion during Q122, reflecting a deposit to loan ratio of 86 per cent. Majority of flows were sourced from customer deposits, in line with the bank’s objective to further strengthen its liquidity.

Looking forward, Ms George said AMP will “continue to transform and simplify wealth management delivering better outcomes for our customers and advisers”.

“There’s continuing interest in the North platform from external financial advisers as we continue to expand its investment menu with new managed portfolios and ESG options for clients.”