AMP Limited

Yes, thank you very much, and I'm very glad to have you all join us so soon after our investor day to deliver our first half 25 results. Before commencing today, let me acknowledge the traditional custodians of the land on which we're holding this meeting, which for us, of course, is the Gadigal people of the Eora Nation, and I'd like to pay my respects to the elders past and present. Of course, with me today, I also have our CFO, Blair Vernon, who will talk later. So if we just go through the order of proceedings for today, I'll firstly just do a quick overview of the first half 25, and then Blair will deep dive into our financial results, including in each of our business operating units. And then we'll do a focus particularly on cost, capital, our guidance for the remainder of the year, before we give a quick wrap up on what our priorities will be for the second half. So if we come to the first half 24 highlights, I think about this as a continuation of just delivering on our promises every single time. The group NPAT is up over 9% to $131 million as we continue to drive cash flows in our wealth businesses while remaining focused on efficiency and removing those stranded costs from the transactions we've undertaken. Controllable costs continue to decrease And I'll remind you, at the same time as doing this, we're absorbing inflation of over 3%. EPS is improving and has improved 18% in the half, both positively impacted by the operating performances of the businesses, but also by the share buyback through the capital return. And today we announced an interim dividend, as promised, of $0.02 per share, franked 20%. On top of the financial results, we've also launched lifetime solutions across our master fund options, launched AMP Bank Go, and continue to prudently manage loan growth for margin, not volume. So let's just quickly reflect on the portfolio AMP has today. By now I'm sure you're all familiar with our operating units, the platforms, super investments, where we spent a lot of time a couple of weeks ago deep diving into the way we're driving those businesses. Of course, we also have AMP Bank, which consists of our heritage as well as our new AMP Bank Go digital offering and the New Zealand wealth management business. We still do have exposure to a number of partnerships that continue to deliver both growth and dividends. If I look at our China assets, The payout ratios on dividends have increased for both our CLPC and our CLAMP offering. And you may recall that we've been talking about this for some time. The businesses grow, but we wanted to focus on increasing dividends. And CLPC increased from 30% to 35% payout, and CLAMP paid a special and almost commenced dividends this period of 40%. We expect dividends will continue, but maybe not at that higher level. And of course, PCCP continues to deliver in line with its actual performance. So let's just go a bit deeper on each of the business units and the execution through the first half before we get into the numbers. In platforms, we went into detail in Investor Day But I think it's important to remember that we do continue to innovate in retirement. We're not just talking about it, we're actually executing on it. And we're now working on the next phases of those innovations. We are growing fast in managed portfolios, but we have a robust process around management of that. We're driving AI to improve advisor efficiency, And we're really focusing on that sales capability. And I was pleased to announce the new appointments just a couple of weeks ago. In S&I, our lifetime solutions is now being delivered for 140,000 customers and is growing. Returns, service, reputation are all at strong levels. We've launched digital advice and we continue to add new modules to that every single month. quarter to ensure that we can meet our customers' needs and help drive that financial well-being. And in the next few days, we'll be delivering Citro our rewards program to members in the AMP business. In New Zealand wealth management, it'd be fair to say that it's a very difficult economy in which they're operating. However, our diversified income through advice, KiwiSaver and general insurance does provide us some protection across the income base. And our bank is focused and continues to be focused on margin over a volume whilst looking for those niche opportunities such as the self-employed area. We also launched our 10-year interest only to support the proposition about AMP being an expert in retirement. And of course, we just recently introduced our new broker interface to streamline processes. And I've been very pleased to see the feedback from brokers that we've been receiving. And on top of that work, we launched AMP Go. On time, on budget. Our new digital offering to both individual and mini businesses. And just to reflect on what we've done over the last six months. I want to remind you back in November 23, we said we would launch this in the first quarter of 25 and we did that. In February, we introduced personal and mini business transaction accounts. In April, we were first to bring Qantas Frequent Flyer to transaction account balances. In June, a simple business overdraft. In July, savings accounts for both personal and businesses and we also brought in live pay for businesses. And over the rest of the year, we'll introduce joint accounts, further developments for overdrafts and term deposits. I think this demonstrates that we can execute when we put our minds to things. And on top of that, AMP Go has really helped facilitate the cultural change that we're bringing across AMP. So on that note, Blair, please let us go to the financials.

Thanks, Lex. And good morning, everyone. As Nick has outlined, underlying impact for 1H25 is up over 9% to $131 million and a half. Total revenue increased to $632 million for the half, and importantly, our controllable costs fell by over 4% to $303 million for the half, delivering an EBIT improvement of some 14% over 1H24. Earnings per share increased over 18% off the back of these improved metrics, and similarly, Cost to income improved almost 3% to 59.4% in the half on the basis of our measurement. ROE also improved at a group level to 7.4%. Statutory profit is down slightly half on half at $98 million. Breaking up the details of underlying and stat profit, we did absorb an increase in litigation and remediation related costs during 1H25. reflecting the further mobilization of our response to class actions. Secondly, our business simplification program continues as planned, with $21 million of post-tax expense in the half, broadly consistent with our prior periods, and within our anticipated total envelope of spend across this program of up to $150 million pre-tax. Following on from our Q2 cash flow announcement on July 21st, Our 1H25 AUM reconciliation shows the positive improvements across all three wealth management businesses. Platforms AUM up over 11.5% to $83.2 billion, with margin holding steady at 43 basis points. Superannuation and investments AUM grew over 8% to close the half at $58.5 billion, including a return to positive cash flow in Q2, as previously discussed. Margin for the half was just marginally down at 62 basis points. In New Zealand, AUM increased by 9.6% to $12.2 billion, driven predominantly by market movements, with some modest margin compression, albeit from a structurally higher start point in New Zealand compared to Australian businesses. Look at the overall group reporting units now at a high level. Platform's NPAT increases to $58 million for the half, up 7.4%, off the back of significant AUM growth. Superannuation and investments NPAT is flat in 1H25 compared to the prior corresponding period. AMP Bank NPAT of $36 million is a modest improvement, reflecting our careful management of volume and margin. New Zealand NPAT is up almost 12% in the period to $19 million. a solid result built off diversified revenue streams. Finally, our group reporting unit improved to a loss of $16 million for the half as we continue to remove stranded costs as planned. Now looking at the business units in a little more detail. Platform's AUM revenue is up slightly to $172 million for the half, with other revenue and investment income stable half and half. Costs overall are slightly down, reflecting savings from our continued corporate center cost-out initiatives, creating an envelope to continue our ongoing investment in the North business. North Guarantee continued a positive contribution on 1H25, and our managed portfolio growth continues to be another highlight, as Lex mentioned, up 14% in the half to $21.8 billion. Margin for the half at 43 basis points is consistent with guidance, and while down compared to 1H24, pleasingly it is flat when compared to our closing margin of 43 basis points for FY24. Looking at Platforms Margin in more detail, where the flat margin compared to 2H24 is evident in the bar graph on the slide, and the mix between admin and other fees also remains broadly stable. The composition of Platform AUM has only changed marginally in 1H25, in terms of the mix between managed portfolios and AMP-managed funds products on the platform. However, pleasingly, the mix of AUM that generates investment-related fees remains steady at 56% of total AUM on the platform. Platform cash flows were discussed extensively at our recent Investor Day, again, as Lex mentioned. However, I think it's worth reiterating a couple of key points. Net cash flows in 1H25 continue a solid half-on-half outcome in line with our strategic intent. Similarly, the composition of advisors using North also continues to improve, with 2,213 advisors now having AUM of greater than $1 million on the platform, up 25.5. Pleasingly, the cash flow performance from those advisors continues to improve through 1H25, relative to lower volume advisors, as shown in the bar chart on the bottom right of the slide. In our superannuation and investments business, impact for the half was flat at $34 million. AUM-based revenue was up over 4% to $175.5 million, a combination of improved average AUM offset by slightly lower margin when compared to 1H24. Other revenue and investment income is down compared to 1H24. This is mostly a function of positive one-offs experienced in the 1H24 period, not repeating this half. Controllable costs fell slightly in the half, however, variable costs were up in the period tracking the rise in AUM. Notably, IME remained steady at 15 basis points. Net cash flows continue to improve, reflecting a range of positive actions from the management team, including a top quartile investment return for our diversified options in the financial year ending 30 June 2025. Margin across the S&I business is down slightly at 62 basis points in 1H25, which predominantly reflects the impact of fixed member fees and fee caps and the outworking of market movements positively impacting individual member balances. We are actively reviewing the constructive fees across the S&I product range to ensure we are positioned to manage margin dynamics as we look into FY26. Our guidance of margins at circa 63 basis points for the year remains, given the subtlety of these mix in volume characteristics. Albeit, this will remain a critical focus for us in 2H25 as we continue to target growth in this key business. That growth is best shown in the improvement in cash flows half on half, with a significant improvement seen in 1H25 as profiled in our recent Investor Day. Our clear focus on member retention is paying dividends and our renewed investment in this business to deliver new features and benefits to members. We'll see further enhancements rolled out in the coming half, as Lex mentioned earlier. Impact for AMP Bank is up slightly in the half to $36 million, mostly influenced by positive growth in income offset by some cost increases. NIM grew two basis points when compared to 1H24. Our mortgage book grew below system, reflecting our disciplined approach to volume margin trade-off in the asset side of our business. Deposits also fell slightly, again reflecting our granular approach to margin and volume management. Variable and controllable costs collectively grew by $5 million pre-tax and a half. This is entirely as a result of absorbing the initial operating and resource costs from the go-live of AMP Bank Go, which accounted for an aggregate of $6 million pre-tax and a half. Return on capital was up 40 basis points and a half, reflecting our improved operating metrics in the bank. Reflecting into net interest margin, which improved more significantly when comparing to 2H24, with a total six basis point improvement. Roughly half of that improvement emerged in the lending book, mainly as an outworking of fixed to variable rollovers. On the funding side of our book, margin improvement was weighted towards our retail deposit business, as we carefully manage term deposit maturities in particular. In line with our strategy, 1H25 saw the continued growth of investor loans as compared to owner-occupier, with a relatively stable mix of interest only compared to P&I loans. Arrears increased modestly in 1H25 compared to the December metrics, reflecting the ongoing mortgage pressure that a small number of our clients are experiencing. This remains an area of key management focus, albeit our existing weighted average LVR metrics, as shown on the slide, suggest most clients have significant headroom in their facilities. Equally, bad debts and loan impairment expenses both continue to be negligible relative to our book size. Turn to New Zealand, which delivered another strong result with profit up almost 12% and a half. Controllable costs remain flat compared to 1H24, and continues the trend of our New Zealand business, absorbing significant inflation in that local market over many years. Net cash flows, excluding pension payments, are up in the half, as is average AUM. This represents a positive outcome when considering the difficult market conditions in New Zealand, where unemployment has now risen to 5.2%, and KiwiSaver hardship withdrawals are up 26% across the market. MPAT underlying in our group unit improved 20% to a reported loss of $16 million. Our partnerships in China delivered a strong result, up 35% on 1H24 at $27 million. Conversely, our other partnerships reduced by $7 million, predominantly as a result of property valuations in the PCCP fund and FX movements. Collectively, this saw the partnerships contribution to our results steady half on half at $37 million. Other revenue fell to $4 million and a half, which reflects the reduced contribution from the residual advice assets that were not part of the sale perimeter in our advice transaction, which we announced at this time last year. Interest expense on corporate debt is broadly steady half on half as a result of average debt balance and interest rate mix being higher overall. As previously noted, controllable costs at a group level continue to fall as we harvest stranded costs in line with our guidance. As I just mentioned, our joint venture partnerships in China continue to make a growing contribution to the overall group. China Life Pension Company, with an equity accounted carrying value of $525 million in 1H25, is the larger of these two joint ventures and has achieved a preeminent position in the pension market in China. This has built off its market-leading position in the Pillar 2 enterprise annuity segment, and now its rapidly growing success in the recently launched Pillar 3, or individual segment. AUM was up 21% in FY24 to the equivalent of $441 billion Australian, which underscores the scale opportunity in the Chinese pension market. Dividends from CLPC and FY24 have increased with a 35% payout ratio, reflecting the continued success of CLPC. China Life AMP Asset Management Company, with a carrying value of $103 million and a half, also enjoyed significant AUM growth in FY24. up 27% to the equivalent of $89 billion Australian. Pleasingly, as Lex mentioned, the first significant dividend was paid from CLAMP in 2024, representing a 40% payout ratio of distributable net profit. Now turning to costs. Controllable costs in 1H25 at $303 million represents a 4.4% reduction in absolute terms, having absorbed continued inflation pressure across most of our expense lines. Employment costs experienced that inflationary pressure more significantly, and in addition, the resourcing of AMP Bank Go also contributed $2 million to the increase in this line. FY24 employment costs in total also had some timing differences, which contribute to the historically better H1 to H2 performance in prior years of our reporting. We expect that to be neutralized this year, and this also contributes to some noise on those half-on-half comparisons. Also noteworthy is our continued shift to a better mix of permanent staff compared to consultants, which makes for a mixed change across employee costs compared to professional services. Pleasingly, we saw continued reduction across the rest of our expense categories, which demonstrates the discipline and rigor of our cost improvement initiatives. Technology cost saves continue and also include the continued acceleration of our investment in AI to further future-proof our technology and digital capabilities. Now to capital. Following on from our restatement of capital and liquidity at FY24, we summarize on this slide our 1H25 capital position. Group CET1 surplus capital has increased to $211 million, benefiting from statutory profit in the half of a net $98 million, offset by the FY24 final dividend and net business activity. Business activity in the half absorbed $39 million of capital. However, this was offset by the realization of $40 million net deferred tax assets delivering the virtually flat net business activity impact in the half the 1h25 interim dividend announced today will naturally reduce this surplus capital by further 51 million dollars as we enter 2h25 group cash remains slightly higher than our target level but this is expected to trend down in coming periods as we continue to optimize the group liquidity position Finally, updating our FY25 guidance, subject to market conditions as usual. We maintain our guidance on margins of circa 43 basis points for platforms and circa 63 basis points for superannuation and investments, as we look at the full year. In contrast, we revised slightly our FY25 NIM for AMP Bank, which we now expect to be broadly in line with the 1H25 result at circa 1.3%. Controllable costs are expected to be $600 million, in line with our market commitment and guidance. This will include the initial AMI Bank Go operational costs, reflecting ongoing cost-out momentum in our underlying business. Our business simplification program continues to deliver results and is now expected to conclude slightly later than anticipated, but remains within our guided investment envelope of $150 million pre-tax. This timing change reflects our careful approach to this program at work and ensuring that we get maximum value from every dollar spent. Our partnership's performance guidance remains unchanged. On our own back to legs.

Thank you. And so if we look forward to the second half, the priorities are consistent. We want to continue to drive that improvement quarter on quarter for our wealth flows by focusing on innovating in retirement, utilising AI for advisors to improve their customer service, but also for our own efficiency. And of course, improving retention in our S&I book. Secondly, we're focused on scaling AMP Bank Go while continuing to look for lending in those niche opportunities to improve the margin. We will deliver on the 25 cost promise and look to maintain CTI competitiveness through the years into the future. And fourthly, we want to continue to support the partnerships and look for the opportunity, as we've talked about, to exit the PCCP relationship in the future. So I think when we look at O&P, we're delivering on our promises. We've returned the capital, and that's starting to show in the EPS growth. We're delivering on our cost promises. We're not just talking, but we're delivering on innovation in retirement, And we're delivering growth and really gaining momentum across our wealth businesses. I think we're at the point where we're in a strong position to really capitalize on the very hard work of many years. So with that, thank you very much for listening today. And I'll pass over to you, Maggie, for questions.