AMP CEO: We’re rebuilding our reputation with advisers

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.”