AMP Limited

Good day and thank you for standing by. Welcome to AMP Full Year 2025 Results Conference Call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. And I'd like to hand the conference over to your first speaker today, Alexis George, Chief Executive Officer of AMP. Please go ahead.

Yes, thank you very much and welcome to the full year results for AMP. Before we start proceedings today, I would like to acknowledge the traditional custodians of the land which are holding this meeting. which for us is the Gadigal people of the Eora nation, and pay my respects to elders past and present. Of course, today I am joined by our CFO, Blair Vernon. And before starting proceedings today, I would like to acknowledge the negative reaction to the results, but I believe these are credible results. We've delivered what we said we would, and we want to give you some colour on that today. So if I look at the agenda, I firstly want to take you through an overview of the results together with achievements and deliverables of 25. Then I'll allow Blair to walk through the individual business unit performances, what we've done around cost management, capital management and of course guidance. Then we'll then have ample time for Q&A. So if I look at where AMP is today, I think we're in a strong position to enter the next era of truly positioning us for growth and owning that space of retirement. We got to this point through sheer hard work over the last five years. We've simplified the portfolio, strengthened the balance sheet and returned $1.1 billion of capital to shareholders and recommenced dividends. We've reset the cost base and efficiency muscle is now well developed. We have a strong and talented team, as demonstrated by the internal succession, and we resolved many of the legacy issues that we were dealt. And on top of that, we've restored reputation to the highest level since 2008. In my mind, this execution now allows us to focus on growth and to make AMP that place that can help all Australians to have a dignified retirement. We are unique in having all the building blocks for making this happen. If we look at those starting out, we have digital banking. We have Simple Super, which has been added to by the release of Boost, which gives people the options for greater retirement income with no decisions. We have rewards to help people with everyday spending. And we're lucky enough to have a simple advisor menu grow on MyNorth. If we move to the building wealth base, We have all the investment options from managed accounts to managed funds. We support all forms of advice, digital, intrafund, and we are a vocal supporter of professional advice and the change it can have for individuals. We have lending both for individuals and mini businesses. If we come to that pre-retirement phase, we have guarantees, which gives certainty but also exposure to the market as we know we're all living longer now. We've just introduced SMSX loans in our bank, and we're working on many more solutions. And in retirement, I think it's fair to say we're the leader in terms of innovation here, where we have the full menu. Account-based pensions, lifetime pensions, and all forms of advice. And on top of that, we're dealing with the social aspects with our lifestyle app, Citra. So when we come to the AMP strategy, from my perspective, it's simple. Growth, innovation and embracing change, whether it's new models, new tools or new partnerships. On growth, we want to continue to support those loyal advisors who stood by us over many years. But on top of that, we now have the solutions, the service, the price and the innovation to grow our new advisor base. We want to build that D2C capability, utilising our restored brand. And we want to grow AMP Bank Go deposits, which is part of the strategy to improve return on capital in our bank. On the innovation space, we want to build off lifetime solutions. We are unique in having that intersection of wealth and banking, and we want to use this to create new opportunities for our customers. And in change, we are embracing AI. 95% of people are now using it on a daily basis, We have over 400 agents deployed across the organisation. But on top of that, we acknowledge we're a small company and we use the expertise of partners to help embellish this. So let's look at the highlights of 25. Our MPAT and MPS were both up greater than 20%. MPAT 21% and EPS 25%. And our cost base has been reset. and the program complete, but it doesn't mean that we won't stop focusing on costs, and that's why we put CPI into our KPIs. The platform's cash flow was up 85% on last year at $5.1 billion, and the S&I flows are improving too. We launched BankGo in February of 25 and have $310 million in deposits. and more customers and transaction accounts than we expected. And on top of this, we've resolved most of the legacy issues, including the last ones remaining from the Royal Commission. And of course, today, we again announced the $0.02 per share dividend at 20% franking. Diving a little deeper into each of the business units. In our platforms area, we've demonstrated strong momentum with growth in advisor numbers and licensees. Our innovation continues, not just in managed portfolios, but our MyNorth Interactive, which is the platform that helps advisor productivity, where we continue to pursue ideas to make advisors' lives easier so they can focus on their customers. And the AI FileNode is a great example of this. And also, our lifetime solutions are now showing great momentum. And we're the only one in the market who has yet to launch a de-accumulation product. And pleasingly, the Acumen or ex-ANP advisors, despite now being completely separate from ANP, continue to support us. I think NNG recently said that we're in the top three platforms for advisor satisfaction and where their lead users were in the top two. If I move to our S&I business, cash flows are improving here too. We continue to have top quartile performance, good insurance, intra-fund advice, and we're expanding our digital advice journeys constantly, with over 30,000 users now going through those journeys, helping to improve education with our customer base. Also in 25, we launched Lifetime Boost, which is the equivalent of Lifetime Solutions, and we'll put the income stream portion of that in in the first half of this year. And we put in an AMP rewards program for our customers. If we come to the bank, it was a year of execution. In our traditional bank, we've continued the mantra of margin over volume, where we were focusing on higher margin, investor only, and the 10-year interest only. We also recently launched the SMSF offering, We've had a renewed focus on balance sheet and particularly our risk weight asset management with a view of removing or reducing capital usage as new opportunities now arise in the market to address this. And on the ANP Bank Go, as I said previously, we have $310 million in deposits with new offerings of overdraft allowing us to focus on the mini business sector in the last half of 2025. In New Zealand, the business just continues to deliver in reasonably difficult economic environments. We've had good performance there in KiwiSaver, and the shift to supporting retirement through both advice and solutions is starting to demonstrate some benefits. And the revenue diversification there does offer some protection for our business. So on that note, let me ask you to go through the details, Blair.

Thanks, Leeds, and good morning, everyone. As Nick's mentioned in our opening comments, underlying impact is up almost 21% to $285 million for FY25. Revenue increased 2.8%, while pleasingly controllable costs fell almost 7% off the back of our business simplification program, which saw EBIT increase over 21% in the year. Earnings per share are up over 25%, and our cost of income fell more than 6% at the group level. noting our rebasing of this metric in recent disclosures. Retail and equity at a group level continues to improve and is now reported at 8% for FY25. Turn to the reconciliation of statutory impact, where two key drivers have influenced this outcome. Litigation and remediation related costs of $95 million for FY25 reflects the significant progress we've made in resolving legacy class action matters during the year. and recoveries against prior remediation programs. Business simplification expenses for the year totaled $50 million on a post-tax basis, in line with our previously announced business simplification program. This has resulted in statutory MPAP result for the year of $133 million. Looking now at total AUM, which is up 9% to $161.7 billion. with increases posted across all three of our wealth management operating units. While market movements have contributed positively in FY25, the significant increase in platforms net cash flows stands out compared to prior years. Across our super investments in New Zealand businesses, we also continue to see improvements in cash flow trajectory. Across our five reported business units in our group, we continue to see our strategy delivering results. These business unit results reflect the restatement of costs as advised to the market recently. Strong cash flows continue to drive momentum in platforms, as Lex mentioned, while consistent performance improvements underpin our super investments result. At ANP Bank, our existing bank division showed underlying improvement on prior year, while our ANP Bank Go division continues to scale. New Zealand Wealth Management continues to perform well, and the Group Operating Unit is significantly influenced by the strong performance of our China partnerships and those rebased group costs. Turning now to the individual business units in a little more detail. Underlying impact for platforms is up over 9% in the year to $106 million. Average AUM is up almost 11% in the year, with the highlight being more than 85% improvement in net cash flows to over $5.1 billion for the year. Cost of income fell over 3%, reflecting continued disciplined cost control against a backdrop of sustained investment in our platform business. Margins contracted during the year by two basis points on a net AUM basis, or three basis points at a gross level. This following slide breaks out the margin trend compared to prior periods. 58% of AUM on North generates investment-related fees on top of admin fees. Although the shifting mix from managed funds to managed portfolios has seen margin compression through the year, similar to the experience in previous periods. In addition to the mixed trend, AUM growth at a client level continues to intersect with tiered fee structures and fee caps. Year-on-year improvements in net cash flows are reflective of our growth strategy and partnership with advisors across the industry. We continue to grow the number of advisors who have material volume on North and extend new distribution agreements. Pleasantly, the cash flow dynamics for advisors with material volume on North also continue to improve, as highlighted at the bottom right of the slide. There remains a significant addressable market for North for new advisors, and that remains a particular focus for us in our growth plans for 2026. AUM Mix is predominantly super and pension-oriented, again reflecting our clear focus on this segment of the market and aligned with our strategy. In our superannuation investments business, NPAT is up almost 15% at $62 million for FY25, predominantly as a result of average AUM increasing 7.7% in the year. Net cash outflows almost halved in the year to $542 million, reflecting our continued progress in this business. Cost of income continues to improve, down almost 5%, noting that rebasing of cost allocations is previously disclosed. Margins on a net basis are steady at 48 basis points. Gross margins are down one basis point for the year, although this was matched by reduced IMEs, broadly delivering that net margin stability, as I mentioned. Admin margin compression is a function of continued AUM growth against fee structure and caps, analogous to our platform's experience. Overall fund composition is largely unchanged year-on-year, although the underlying investment choices have delivered that IME compression. S&I cash outflows at $542 million compare favourably to prior years, and we maintain our ambition to reach positive net cash flows in FY26. A number of initiatives targeting retention and new member acquisition were delivered throughout 2025 by the team, and are anticipated to underpin the continuation of our results improvements across the S&I business unit this coming year. Turning now to bank, where underlying impact for AMP Bank on a combined basis was $55 million for FY25. NIM improved by two basis points year on year, while our mortgage book growth was below system at 3.8%, consistent with our strategy. Return on capital for the combined bank was down 40 basis points, which reflects the impact of delivering and beginning to scale AMP Bank Go. ANP Bank X of Go delivered improved NPAT return on capital and positive income metrics in FY25, as highlighted in the middle panel of this slide. ANP Bank Go was successfully launched during 2025, and the launch and run costs began to emerge, as reflected in the bottom panel of this slide, consistent with our strategy and previous guidance to market. The launch of ANP Bank Go was a key plank in our retail funding diversification strategy. as we seek to improve NIM over time, specifically by growing transaction account balances. During FY25, we continued to adjust the composition of funding overall for AMP Bank. This saw additional utilization of securitization off the back of favorable market conditions. Deposit funding mix was influenced by planned runoff of rate-sensitive term deposits. And both our deposit and wholesale funding decisions added positively to NIM while the bias towards further wholesale funding to achieve capital relief had some downward impact on them, together with the redemption of our remaining 181 capital notes. Those funding wage decisions have been an important ingredient in our continued focus on capital consumption across our banking business in particular. We continue to see a reduction of risk-weighted assets relative to our mortgage book, allowing capital release back to the group. As noted earlier, the 18-1 reforms and issuance of Tier 2 capital have impacted NIM during the year. However, this is a one-off change. Credit portfolio metrics and competition remains positive, with our strategic focus on investors and interest-only options showing positive trends in the portfolio breakdown table on the slide. We continue to see improvements in arrears rates over prior year, while bad debts and LIEs remain nominal. 64% of borrowers are more than one month ahead in payments, up from 60% in FY24. New Zealand Wealth Management reported an impact of $39 million, which is up over 5% year-on-year, against a backdrop of modest reduction in total revenue, which was partly impacted by New Zealand dollar weakness. Net cash flows improved over prior year, despite difficult economic conditions persisting in the New Zealand economy. Overall, cost performance continues to be a strength of the New Zealand business with a broadly flat cost-to-income ratio. The group result of $23 million underlying impact is significantly influenced by the previously announced rebasing of costs across our business units. Controllable costs attributed to the group were $70 million for the FY25 year. Equally significant is the continued improvement in our partnership performance, up over 15% for the year. Our China partnerships combined delivered more than 53% improvement to $72 million for the year. Observing that improvement is a reduction in our other partnerships as a result of more normalized property valuations in our U.S. property fund when compared to the one-off benefit experienced in FY24. Given the significance of our partnerships in China, we have summarized again on this slide some of the key drivers underpinning the performance of China Life Pension Company, or CLPC. CLPC is the preeminent pension company in China, managing over $440 billion of assets in Australian dollar terms. CLPC has a commanding position in the Pillar 2 segment of the three-pillar pension system operating in China. The Pillar 3 opportunity remains significant as the pilot phase across four provinces is expected to expand to all provinces during 2026, something CLPC has proactively positioned itself for. As noted at the half year, we saw an increased dividend payout ratio of 35% from CLPC and remained focused on ongoing dividend payout. Across the balance of our partnership stakes, China Life A&P Asset Management, or CLAMP, delivered its first dividend in 1 age 25, which is a key milestone in this partnership performance. PCCP continues to deliver steady performance, however, as previously noted, We do not see exposure to a property investment business in the U.S. as core to our growth strategy for the group, and we will continue to explore divestment options at the appropriate time. We continue to pursue realization of carry related to former AMP Capital business, and a recent sale by Digital Bridge may create potential for carry. However, at this stage, it remains subject to a range of conditions. Our business simplification program has continued to deliver against the commitments we made to address the cost base of AMP over the past two performance years. Controllable costs reduced almost 7% during FY25, with reductions noted across all of the categories and work streams in this program. Our closing costs of $603 million reflect the absorption of $5 million of controllable costs associated with AMP Bank Go as we launch this business to market. Now turning to capital. Group CT1 capital has increased 4.5% during the year, against a capital requirement falling by over 4%. This collectively sees our CT1 surplus capital position at year end improve to $287 million. Allowing for the 2 cent per share dividend, which Lex has discussed earlier, this delivers a FY25 pro forma capital surplus of $236 million for the group. Deferred tax assets were consumed during the year in line with our strategy and business performance, and we retired our group credit facilities given the positive cash and liquidity position now established across the business. FY205 has seen capital generation as a result of our continued improvement in business performance, and we aim to continue to actively manage capital efficiency with a particular focus on improvements across AMP Bank in the coming year. We continue to assess the range of inorganic opportunities for scale or capability that are emerging across the wealth segment, which influences our immediate perspective on further capital management. Today's announcement of a $0.02 per share final dividend brings FY25 dividends to $0.04 per share, and we anticipate consistency in this dividend approach through FY26 and 27, noting our limited franking credit balances. In the absence of a compelling alternative use of capital, our preferred method of capital return to shareholders beyond our current dividend approach would be via on-market buyback. Now turning to guidance for the FY26 year. Subject to market conditions, we treat margins in our platform as business to be 40 to 41 basis points and 60 to 61 basis points for our super-end investments business. In AMP Bank, we are targeting deposit balances of $1 billion in FY26 for AMP Bank Go, and expect NIM in the range of 125 to 130 basis points. Partnerships are anticipated to deliver 10% per annum return over the medium term, and controllable costs, as previously advised, are expected in the range of 630 to 640 million FY26. Finally, our business simplification program remains on target to complete during FY26, with a further $20 million of investment. I'll now hand back to Lex to summarize.