Amp Ltd

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.

Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by as we compile the Q&A roster. Our first question comes from the line of Julian Braganza from Goldman Sachs. Your line is now open.

Good morning, guys. Thanks for taking my question. Just a first one in terms of the China partnerships. You talked a little bit about their, just in terms of the favourable macro backdrop supporting trends in those businesses. Can you maybe give us a bit of colour in terms of how you're thinking about just the earnings growth and what it means just in terms of earnings going forward, please? Thanks.

Yeah. Yeah, thanks for that question. I think if we look at the China environment, despite what might be happening economically, The government has been really supportive of the pension reform there. I heard Blair talk about the Pillar 3 where they've introduced some tax advantages encouraging individuals to contribute voluntarily. So I don't really see much of a change in the trends there and the growths are just phenomenal from an Australian perspective anyway. So we're expecting that to be 10% through the cycle. And that's particularly in the pension company which has got a predominant position across most of China. I think in the asset management area it's a little more challenged. You've got a lot of global participants there, but it's very much the smaller of the two partnerships. So I think in terms of FUM we'll see continued asset growth. How does that drop through to profitability? At this point we've seen continued improvement in profitability through the cycle. That's great but we also want to see the payout ratios and dividends which is why you've heard both Blair and I call that out today because at the end of the day that's cash in our bank account and it was very pleasing this half to see uplifts in CLPC and certainly our first significant dividend for Clare.

Got it, thanks for that. Maybe just shifting to the bank, just in terms of the NIM that you printed there. So clearly, clearly very strong in the first half, which goes well going to the second half. But I just understand, given that trajectory and the trend in the NIM, particularly from second half 24 to first half 25, why is it that for the full year, you've kind of maintained it at 1.3% and you're not expecting some of these benefits to persist. Just how should we be thinking about that second half minimum, given we're now calling for kind of flat-ish minimum between first half 25, second half 25, despite the strong improvement?

Yeah, thank you for that question. I'll ask Blair to talk to that. I think one thing is really important to know for at least our heritage bank is we don't have a lot of transaction accounts. So we don't have a lot of... money that is at zero interest rate or close to zero. So for us, it's quite a different dynamic to most of the other banks in the environment. And certainly as markets change, as rates change, we have some opportunities there. But Blair?

Yeah, great question, Julie. A couple of things that occurred in the first half that I think have helped us. As I commented, we saw the sort of, I guess, the final tale of fixed or variable rollovers. There's virtually no fixed in the book. So yeah, we don't see that benefit repeating. And similarly, the fine-tuning and really granular work that we've been able to do on term deposit maturities and being very thoughtful about the competitive dynamic did deliver us some benefits in the first half, but as you saw in our sort of aggregate numbers, we did see a bit of a fall in deposit volumes. We can't continue to see that fall away because obviously the overall funding, which is really critical. Our view on TDs and deposits generally is the market certainly remains super competitive and we're going to need to continue to compete in that space. So we're just cautious about that dynamic as we look in the second half.

Got it, that's clear. And then maybe just on the F&I business, just the margin there as well, retained the full year despite 62 for the first half and buying a little bit of an increase in the second half from what's suggested. maybe just that and also just medium term. You've tried a few changes there to attract growth. Just how you can get off the margins about business in the medium term.

Yeah, good call out. Obviously, margin was slightly below anticipation, although I think broadly in line with that sort of circa 63 basis points. The reason we've kept with that guidance is that, as I mentioned in the presentation, there's quite a complicated mix of dynamics there. And to some extent, the margin compression we've seen in first half is a result of AUM growth overall in the book. And so we see individual client balances growing. That's where that fee cap issue sort of emerges more. And so, you know, if markets are steady or if there was any decline, we would actually see, you know, some benefit back to margin. So it's quite an interesting balance. The other thing that, so I guess the reality is, When we look at that, that bit of margin movement as a result of AUM growth, not any reduction in pricing or changing of rate cards. I do think we need to closely examine that fee cap and fee structure mechanism to address that. And so that's why I've called that out. It's something the management team are working on. And so that will be a key focus for us as we look into FY26 as well.

Got it. Thanks. I'll just put one last question. This is for the capital management. We should have seen some benefits come through on the change in the operational risk charge for the platform business. There should be further benefits coming through as well. You have the DTAs, you flag sales, potential sale of PCCP, potentially an earn out as well on the sale of the anti-capital business, columnar capital. Just how are you thinking about capital now? Just given some of these benefits that are starting to emerge, how should we be thinking about it?

Yeah, it's an interesting question and clearly there's some positives on the horizon, I'd like to think, and you've just mentioned a few of those. And clearly we're in a strong capital position at the half. You know, we did have the class action that we've just been running through over the last couple of months and so that was a negative that we were worried about but clearly hasn't eventuated yet and I want to stress we'll continue to fight that hard. But it hasn't gone away. Those near-term negatives haven't gone away yet. And we are back in court on that class action in October. So yes, I think there's positives coming through, but also we've got some still uncertainties arising there. Clearly, we're not in the business of hoarding capital. So I don't want to do that. It drags on our returns, as you well know. So over the next few months into the full year, we'll be having a really good look at that capital and seeing where we're at on the various uncertainties that lie in the future, both positive and negative.

Great. Thanks so much for that.

Really appreciate it. Thank you. Just a moment for our next question, please. Next, we have Nigel Pitaway from Citi. Your line is now open.

Good morning, guys. Thanks for taking our questions. Just first of all, just maybe honing in just a little bit more on that S&I margin. I mean, if markets do remain flat, are there any other factors pushing that margin up, or is it really just the fee caps that's the main factor there?

I mean, obviously, the customer mix is also relevant, Nigel. The impact of retention has been great because that means we're retaining high-balance customers. The fee caps for those customers mean they're obviously proportionally paying less. As we anticipate growth in their business, as we onboard ideally more new clients, that will have an impact in terms of the overall margin mix as well because conversely, those clients onboard typically have lower balances and therefore the fee caps work the other way. So I think that shift as we're now seeing those early stages of growth in S&I and ideally that shift from Continued retention, but also now moving to growth, that's a factor that we think gives us some opportunities.

Okay, so you don't need markets to fall for you to achieve your margin guidance in F&I. That's basically the conclusion, yeah?

We want to continue to grow that new customer base, Nigel. That's absolutely our focus right now. And I think the recent launch of the Lifetime Solutions is part of that, but we're also doing quite a bit of marketing at the moment.

Okay, thanks for that. And then maybe just on the controllable costs, I mean, obviously, you did sort of touch a little bit on this, that there wasn't sort of normal seasonal factors pushing down first half, but obviously to hit the cost guidance, you will have to reverse that usual second half versus first half seasonal skew you get on the costs. Can you just maybe expand on that as to why you think that the normal seasonal skew that we see in the controllable cost base isn't going to appear this year?

Yeah, I can, Nigel, but I want to be really explicit that we will meet our controllable cost guidelines. I just want to say that up front. And when you have a look at the waterfall, you can see that it is in employee cost. And part of that sticks, but part of that's variable, so it's kind of one-off. change as a result of the variable REM being allocated and hitting the first half of the year. And that's a result of us performing better. So I'm very confident as a result of that that we're going to hit that second half and bring it back down to the 600.

Okay. All right. And then you did sort of suggest that group cash was likely to decrease, you said, as you were optimising group liquidity. Yes. I mean, you are holding a fair bit of cash of $800 million. Can you maybe just explain a bit more about the philosophy behind that and how you expect that to track down moving forward?

Yeah. Briefly, I mean, obviously, we've had that sort of elevated cash position for a little while, and that's been a result of our positioning around anticipated outflows that there might have been across some of those negative elements that Lex talked to, obviously those haven't eventuated and we've continued to free up cash resources across the business and obviously naturally benefits from that continued momentum around cost save, which is now really baking in. So as we've seen that position become more certain, we're now much more confident about fine-tuning that. That'll include near-term activities like, as we note in the slide there, the group credit facilities which are undrawn and we'll roll those off in short order as we trim both the cash but also any other facilities in place.

Great. And maybe just finally, I mean the digital bank seems to have started pretty well but it is notable that the SKU is more personal than the SME you were originally targeting. Is that sort of an ongoing thing, or is that just because you need to launch more of a target with the SME? How are you thinking about that?

Yeah, I think that's a fair observation for where we are now, Nigel. I just think it's important to remember we actually only launched most of the package that was focused on businesses through July, which included the overdraft and the live pay. So I'm not surprised that those are the numbers that we're seeing right now. With the launch of that though and with the above the line marketing campaign that just started last week and hopefully there's a bus being seen by you somewhere, we will expect to see those changing dynamics during the second half. But it's pretty much what I would have expected given the solutions we had available for the first half.

Okay, great. Thanks very much.

Thank you. Next we have Andrew Sandek from MS. Your line is now open.

Good morning. Can I ask my first question around margins in the platform business? So it was pleasing to see those margins remain steady, but Nick, can you explain a little bit about the different moving parts in terms of the composition? You know, you called out, you know, that investment component, or sorry, the fee-paying component at 56% of AUM that generates investment-related fees. You called that out, you know, as being stated and that being helpful. If we look back at what happened in FY24, that 56% actually increased by four percentage points during FY24, and yet margins overall, you know, fell quite clearly. So can you explain a little bit, you know, just what are some of the different dynamics that are happening in terms of the platform margin and how should we think about any mix shift going forward?

Yeah, it's a really good question. And as you sort of recognise, the margin dynamics are pretty complicated in that business. Just briefly on the split between sort of what we call A&P managed funds and managed portfolios, the growth in managed portfolios is clearly significant. been very aggressive in the last couple of years. And in the early stages, a lot of that managed portfolio growth did not include necessarily material impact or material composition of any AMP managed funds. And actually, some of that growth was actually straight out of those managed funds. So there was some sort of churn and mixed dynamics more early that we're now seeing more moderated. And so a combination of managed funds, a little more stable, And some of those managed fund products and components inside the managed portfolios means we're seeing some mixed dynamics that change. So our, yeah, hence you can see that more stable margin. I'm not for a moment suggesting that's not a constant focus for us. And we're very sensitive to the fact that there's a lot of competitive pressure out there and that that margin is a key focus for us. But we're pleased to see you know, some stability in the first half relative to, you know, certainly first half last year where there was some compression.

So, you know, is there like a key figure to watch here, you know, for investors? Because there's a lot of moving parts. But, you know, is there a key figure to watch here? Is it a 56% versus 44% split? Or what would be a simplified way to think about this?

Yeah, I wouldn't want to try and boil down to one simple number, the margin dynamics of platforms. There's clearly a lot of levers that operate across the platform market. I think, I mean, frankly, the one number I look at is overall volume growth and is that volume growth that we're seeing not occurring as a consequence of margin compression. I think the first half demonstrates, you know, we've been able to deliver, you know, volume growth through the business and stable. So I'm focusing on volume growth first and foremost and margin stability. In terms of margin composition, as I say, I think that the managed portfolio and managed funds mix is a key one. If that was to move substantially, then you would potentially see some change. But certainly at the present point in time, based on what we're seeing come through week on week, yeah, we've got confidence that the circuit 43 is valid for this year?

I mean, I think that's a fair question to ask and that's why we put the balance of the portfolios there because if we found that we're in a unique position that we have an investment manager in AMP as well. So we're not just an admin provider here. We've got those two components. And I think the benefit we have started to see significant improvement in the returns that the AMP investor, investment management, Cadbilly has been delivering, which is why Blair's saying we're now starting to be in some of the managed portfolios as well as in our own direct managed. And so, you know, if we started to see our returns fall back again, I would be worried about that because we'll start to be deselected from managed portfolios. So I think watching our returns as an investment manager is really key.

Thank you. And look, for my second question, I just want to ask around the volume growth, because just coming back to, I think, the chat we were having earlier as well, and that mini-invest today and platforms and super investments, the flows have been stronger. And I think you almost implied you still expect to see quarter-on-quarter growth from here. So what are some of the features you've seen in terms of lead indicators on flows? What are some of the BDM activity investments you're making? What additional colour can you provide here?

Well, I think for us, if you look at that slide in the pack where we talk about the number of advisors who are supporting North, that is the most critical thing for me. The number of active advisors, which we define as those with over a million of funds, who are actively supporting us. And at the moment, that's 2,200, but you'll see that we've got a growing number of positive cash flow advisors. So for me, it's continuing to focus on improving that number. Now, why is that number improving? There's a couple of things. Firstly, we've been able to maintain support from our ex-AMP advisors, and that is really critical for us. Because while they were part of the group, obviously they had greater connectivity to us, but we've been able to maintain that connectivity and support while they're outside the group. And in fact, we've even seen some slight improvements since they've been outside the group. So that is number one. The second one is we are starting to bring new advisors onto the platform. And that's a combination of several things. Firstly, and you heard me talk about it, We've been rebuilding sales capability that we kind of lost in the period of time when we've spent a lot more time internally thinking about things. So that's one. And the second one, we have continued to innovate in that space. We've brought in lifetime solutions, accumulation and pensions. We really are driving AI improvements there that can help the advisors with the customers. We've got one of the best rated apps available to customers that advisors can use. So I think it's a combination of actually innovating, driving service, but also building that sales capability and getting the message out to new advisors. But I would certainly be looking at those advisor numbers that we've kind of highlighted on page 17.

Thank you.

Thank you. Just a moment for our next question, please. Next, we have Harmaswaran from JP Morgan. Your line is now open.

Good morning, Alexis. Good morning, Blair. A few questions, if I can. I just wanted to clarify the outlook for the China investments. Just half and half, the partnerships didn't have any growth in contributions for revenues. I just wanted to to make sure I understand exactly what's happening there, Alexis. You showed charts that showed very strong growth in AUM. I think you said that margins were also holding up in those businesses in terms of earnings, but you're also flagging that the dividend payout ratios are flat to increasing. I'm just keen to make sure I understand whether there's any seasonality, half on half, or whether there's, you know, like should we be expecting this number to grow 10%, you know, in a linear fashion? How should we be thinking about this going forward? And why is it flat half and half?

Yeah, if I may, when you look at the partnerships, I think it's really important to remember that we have China partnerships and we've kind of highlighted them in a bit more detail this time. A, to show the folks some growth, but B, to show the changing dividend profile. But on top of that, we have other partnerships as well. The main one we talk about is the PCCP joint venture, which is a real estate fund in the US, but we've also got some other things there like some sponsor investments in underlying funds, including some sponsor investments in some PCCP funds along with some other less material ones. So when you break down the partnerships, the China one's have in fact half on half grown over 30% actually. And the other partnerships is where the decline has been. And that's been in one of those underlying investments, not in the joint venture. And it's a result of some of the real estate assets in the US being revalued. So I just think it's important to look at the two. The joint venture investment in the US is still doing quite well. It's really hard to predict what the future might look like in terms of those partnerships. But I think, as we said in here, the growth has been around that 10% through the cycle. And to date, a lot of that has dropped through to the bottom line.

Sorry, Alexis, my question was, if I look at your data pack, I think it's half on half, it seems flat for the China partnerships, 27-27.

It's probably due to the payment of the dividend.

Yeah, if I just clarify that, you're right. In our main presentation, we're comparing the 1H and 1H position. Second half 24, yes, it's flat. There is some volatility half and half in the way that China performance gets reported. But overall, we would expect continued performance. You can see, if I look at 1.5 or 1H24, that certainly, yeah, we're seeing that improvement.

It's probably just some one-offs in the finalization of their accounts as opposed to actual trends.

I just want to be clear, because we can't see, and perhaps we see dividends. Is the profitability increasing in line with the AUM that you show in that other chart? Just hoping you could help us with some visibility, because I suppose we can't match all the numbers together.

Yes, I can understand the difficulty that you have in forecasting this, and I'd say through the cycle, that's what we're expecting.

Okay. Okay, thank you. Okay, just a second question if I can. I just want to clarify, Alexis, comments you make in your outlook slide around costs. So I think your words are you want to embed cost discipline for FY26 and beyond and continue momentum in business simplification. So am I to take away that that suggests flat costs from FY26? I think previously you'd said cost outends in FY25 and from there it's all about growth, but the wording here seems a little bit stronger. I just want to be whether I'm interpreting those words correctly or not.

Yeah, I'll let Blair talk a little bit more about the detail but I'll say a couple of things at a high level. Firstly, I think it was really important for us to put some controllable cost targets at an aggregate in the stakes in the ground because we really needed to focus on that. We really needed to focus on the group. We needed to focus on getting rid of stranded costs and I think we've shown we can do that. As we look to the future, though, we really are pivoting the organisation towards trying to grow the franchise. So I want to make sure we do put some money away for growth, particularly in those wealth businesses. But we've also got AMP Bank Go coming through here. So I do not want to let go of costs, but are we going to put one controllable cost target in the ground going forward? No, we want our businesses to be competitive comparatively. And so that's what we'll be more focused on. But I can assure you that between Blair and I, we won't be letting costs running away. But I don't know if you have any other comments.

Yeah, I mean, for the avoidance of doubt, we're not expecting, our current view is we're not expecting 600, you know, to be able to be held flat, you know, ad infinitum. So, you know, we do expect some of that inflationary pressure we've talked about, which we have been absorbing over the last few years to flow through because we have got pressure in all of our expense lines, particularly actually in vendor and partnerships, everyone's responding to inflation. So we're working our way through that in terms of a clear view for 26, but that's our current view.

Okay, but just clarity on that, is operating leverage, should we think that you're guiding to operating leverage or not, or just revenue growth? I'm just trying to make sure I read it correctly.

Obviously, we've got it for 25. I think we'll re-look at our guidance as we come to the end of the year because we may be able to do things a bit differently into the future to be able to give you some better indications of things like China, etc. So I haven't thought about what we'll do into 26 yet. But, I mean, we'll sit with where we are for 25. We're confident we can hit those targets for 25s. we're going to re-look at the guidance to see how we can help you better model through 26.

No, I understand. Okay, and just one final question, just on the bank. So you gave us some detail on the bank go, you know, obviously it's just started, $6 million of costs in the half. Just how should we think about the impact of this on the bank as it scales up? You know, is it likely to be in a drag at the start and how long will it take before it's a contributor? Yeah.

Yeah, thank you for that question and that's right and I'll give you a view of where we're at. Clearly it will be a drag as we go through 26 because we're still building capability in the bank and we've only just launched above the line campaigns. So we are likely to see an increase in the bank in the early parts of 26 as this proposition comes online, as we start to get the benefits from the diversification of the funding. Now, I wouldn't expect to see that really drop in terms of return on equity until the back end of 27 and into 28. And that's pretty much in line with what we told you in 23 when we launched the proposition. So I think you are going to see in the initial phases a drag as we build the deposit base and then start to improve to the latter half of 27 into 28. Great.

Thank you so much. Really appreciate it.

Thank you. Just a moment for our next question, please. Next, we have Lara Tafikzik from Bank of America. Your line is now open. Morning.

Thanks for taking my question. I just had two questions, if that's all right. My first one was around super and investment cash flows. There's been a lot of discussion around your retirement innovations, especially the lifetime solution. Are you able to provide any guidance or advice need indicators on how clients are responding and then how the take-up has been and at what point you think we could expect an acceleration in flows?

Good question. I mean, I think we only just launched those very recently, so it would be remiss of me to give an indication. And as I said, we started the above-the-line marketing and building the digital advice capability as we speak. There's a slight kick up from the $140,000 we announced on Investor Day. This is a true benefit to customers and one most customers can understand. We expect that something like 94% of our customers will be better off using this solution. We have to be able to get those messages across. Where it's going to have a real benefit is when we start talking to the corporates because they can see what that means for their employees. But I do expect this to bring new customers to us. That was the whole point of marketing it. That was the whole point of developing it. I think we'll start to see those results in the next couple of quarters. I don't want to put an estimate on it at this point. I think when we talk about flows on S&I... Yeah, we had a positive quarter in the second quarter of this year. And that is the first time since 2017, so I'm taking that one. Albeit we all know the June quarter is an odd quarter. You know, to think that we'll get to positive flows overall through 25, I think would be optimistic, but we're certainly going to give it its best shot. But I would like to see that happen in 26, and that's through a lot of these initiatives.

Great, thank you. That was very helpful. And then my next question was just circling back to the bank MIM, which positively surprised up to 1.3%. But I was looking at the composition of your bank funding from deposits, which is remaining at 71% of the mix. So would you mind running me through how deposits supported the MIM improvement with that three basis points, and then also any color around your assumptions behind rate cuts going forward, and the impact of them would be really helpful too.

Sure, I'll ask later. We'll go through that for you.

Yeah, the deposit funding overall is relatively stable, but the mix is a little different. So term deposit certainly came off a little, and that's really important to us because term deposits an expensive source of funding when you're not only taking into account the price paid but actually the human work effort required to be managing those relative to a savings account. So that's where we've seen some benefit that's helped us with margin. As I said earlier, we're sensitive obviously always to that funding mix and so we don't necessarily see the ability to make more progress in that margin improvement. given our still significant reliance on term deposits. And so hence, that's why we don't see that necessarily repeating in H2. But we're certainly pleased with where we've got. In terms of the rate cuts, obviously, the two rate cuts in the first half did provide some assistance. And so that was encouraging. The extent to which that provides assistance is always a function of nuance around the timing of that delivery to clients on both sides of the book. And so, again, as we said at the full year, we're not working on the basis of a substantial assumption around those being the key driver of margin. But broadly, it's generally a positive thing. Great.

That was very helpful. Thank you. Thank you.

I think we probably have time for three more questions.

Okay. Next we have Andrew Bunkin from Macquarie. Your line is now open.

Hi, team. Congratulations on the result. Just two quick ones from me, please. How should we be thinking about the direction of loan growth in the bank in 2025? prioritizing margins over growth? Thanks.

Yeah, the answer to that is very simple, yes. I mean, you'll see that we grew slightly in terms of the loan balances, but certainly below market. We are continuing to look for those niche opportunities as I talked about, but we're not going to just grow and declining margins, so it's definitely margin over volume.

Yep, and then the other one from me, you're obviously very, very confident about hitting the 600 mil controllable cost number. Maybe to ask a question from before in a different way, how do you think about your controllable cost run rate at the moment, or is there still a lot of work still to be done?

Thanks. No, I think we're on target to hit that number by the end of the year. As I mentioned before, it mainly came through that employee cost line, and that was a function of A fixed component, yes, but a variable component as well, which has already dropped off.

That's it for me. Thank you.

Thank you.

Thank you.

Thank you. Next, we have Simon Fitzgerald from Jefferies. Your line is now open.

Hi there. Just checking you can hear me okay.

Yes, fine.

Thank you. Great. Just two really quick questions. I just want to explore firstly that 43 basis points. I understand that a bit of that is due to the mix of preference of managed accounts versus more less contemporary products and managed funds. Yeah, you did talk about a bit of a switching. But also, as you grow further, and there will more likely be greater demand in managed accounts, I suppose this is an area that you can't control. And I'm thinking about how you think about that dynamic. If you were to see another couple of basis points shed off that margin, but you were growing managed accounts even faster than what you are today, how are you feeling about that? And I'm just interested to know the dynamics there.

Yeah, it's a good question and it's a fair question. I don't think we think the trajectory around the growth in managed accounts is going to abate. It clearly provides benefits for advisors. in terms of efficiency, which is why I mentioned before how big a component we sit in those managed accounts, which ones we can create ourselves remains really important because we do have that investment management capability. I don't see those shedding in basis points through in the shorter term, but clearly there's going to be continued pressure in there and that's why we're always looking for opportunities. I think we do have some opportunities. Many of you call it out to us all the time in terms of cash. We're very competitive there and we charge very low fees there. So there's a couple of opportunities we're looking at to see how we can deal with that ongoing margin pressure, I suppose.

Okay, and then this follows, the next question follows exactly what you mentioned just then. But Norse, as I understand, has one rate card. You know, it's disclosed, so different practices will still get the same rate card. Given now that you've been exposed to more larger practices, is that something you would consider in terms of taking negotiated rates?

You're right about the statement that we've had one rate card, but I mean we also can't be blindfolded in relation to what's happening in the market. So I suppose I would say never say never to that one and we just have to watch it very carefully.

Very good. Can I just ask also really quickly, sorry Blair, can I just get a little bit of a Guidance in terms of how the tax rate might change in the second half. Should we be using the first half rate and extrapolate that or is there any other sort of things you can think about that might be coming up?

No, I'd be using the first half rate and stick with that.

Roger, thank you.

Thanks. Thank you, Sam. Thank you. Our last question comes from the line of Lafatani Satori from MST Financials. Your line is now open.

Hello.

Good afternoon and congratulations on a cleaner result and a healthier outlook. One of my first questions is in relation to the cash generation with a relatively low dividend and with one-off costs slowing and with the top line accelerating and with guidance for, at least in the next half, for the cost to remain flat. How should we start thinking about the strong capital generation that is coming through into next year? Even with additional investment, there's still a big band of possibilities. Could you just talk us through, should we start thinking about buybacks? Should we start thinking about higher dividends? Can you give us a little bit of colour? Thanks.

Yeah, thanks for the question, Laff. And I can assure you that capital is, as you would expect, a very hot topic for discussion by our board. We did want to give some confidence to the market that there would be at least some minimum capital return this year, which is why we went with the $0.02 dividend per half. As I mentioned before, there's a couple of positives on the horizon, but there's also some downside risks that we were expecting, and they haven't eventuated, but they've not gone away. We'll be very carefully looking at the capital. As I said before, I personally, the board doesn't have any interest in keeping capital for the sake of it, so we'll be looking at that in the second half. Asking me to kind of give you an indication of how to think about that right now, given I don't know about where the class actions will be, I think it's a bit early, but I can assure you we very much understand that there's quite a large surplus there at the moment.

That makes sense. And look, so it surrounds possibly, you know, clarity outcome on class actions because there is a reasonable capital bucket there and it does look to be getting bigger. So we'll look for that outcome. Can I just follow up as well? You know, I know there's been a bit of commentary on the cost side for next year. Is one thing that you can commit to is positive jaws so that if you are going to spend more, it's not going to outpace your revenue growth?

Well, that's certainly the intent, Leif, in terms of the shift to cost of income. Clearly, I think that's really what underpins Lex's comment around embedding that cost discipline. We obviously need to reset that position as we look at 26 and give some clear guidance to you and colleagues in terms of that cost of income trajectory. But absolutely, the intent is Yeah, not to be waking cost in and not getting their requisite uplift in revenue and performance.

Yeah, got it. And can I just understand a little bit more around A&P Banko? And I understand there's a mix of personal customers and business. But are they net new personal customers? Are they coming through a broker channel? Or is A&P Banko really designed as a direct-to-market brand? Or can you just add a little bit more color as to how What's the strategy thinking behind it?

Yeah, Laf, it is only direct to customer, whether that's business or personal. In fact, it's only app. So I think that's really important to understand. Most of the customers are new to AMP Bank. I wouldn't say they're all new to AMP Bank, but they are new to AMP Bank. And we want to start to see, as I said before, that skew more towards businesses. Yeah, in the last, The last couple of days even, that started to change a little bit.

And so if we then start thinking about some of those balances, so $123 million, is that all transaction accounts, i.e. 0%? You're paying on those, but you get all the additional features. And what's the current trajectory of that? Are you adding, is it accelerating? Are you going from sort of $5 million to $8 million to $12 million in terms of the run rate coming in?

Yeah, at the half, that would have been transaction counts, although we've recently launched savings accounts for both business and personal as well. As you said, it's at zero interest, although we are paying Qantas frequent flyers on them. I would like those balances to be, you know, obviously more than double that by the end of the year because that indicates that You know, we've got the whole main solutions out in the marketplace now. We're running our above-the-line marketing campaign. So I would see that accelerating through the second half, both in terms of transactions and savings.

Okay, just one final question on the A&P Banco strategy. Ten-year interest-only loans, talking about offerings for early retirees or pre-retirees. Can you just talk us through the opportunity that may exist for perhaps things like reverse mortgages or similar style interest-only products to be sort of integrated into your investment platform and possibly even within the A&P lifetime super product? Or is there any thinking around some innovation there? Or can you just talk us through traction thought process around the 10-year interest-only loans?

Yeah. I haven't got the volumes to hand on the 10-year interest only, but we can certainly get those for you. And that's in our heritage bank, by the way. The whole proposition about that was to try and support cash flow for the pre-retirees and retirees in the more active years, allowing them to kind of pay in the latter years when they're less active. In terms of where AMT is going more broadly, I mean, you heard us talk a number of times about the fact that we want to become the specialist in retirement, and that means we are going to be looking at things to help make retirees' lives better, and that could go to things like helping them release equity in their house. I mean, these are all ideas we're exploring as we speak. Yeah, Les, these are all interesting concepts that we're looking at. We're testing the market for as we speak. But we want to be the specialists in retirement, not just in retirement, but in the accumulation phase as well. And that means we have to look at how can we make people's lives better. And house and super are the two assets that most people have.

Yeah, got it understood. Thank you. Thanks, Les.

Thank you. Thank you. Thank you for all the questions. This concludes our Q&A session. I will now turn the conference back to Alexis for closing remarks.

Thank you very much for the time this morning and thank you for all of the questions that came through. Really appreciate it and I hope you've got a better understanding of where we are and where we're going and much more simplified results these days. So thank you for your time.

This concludes today's conference call. Thank you for participating. You may now disconnect.