Amp Ltd

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.

Thanks, Blair. So if we look to the year ahead, what do we see and what are our priorities? We still are an industry where there are tailwinds. We have an ageing population, we're living longer and the certainty of income remains an issue. We know that wealth and the homes are the main two assets that Australians have and we're lucky and uniquely placed in having exposure to both of these. We remain a player in a growing but changing market And over the last years, I believe we've shown they're both agile and able to execute on our strategy. So in 26, what are our priorities? Growth. Organic first, but we have to have flows with a real focus on direct-to-consumer. We want to continue to grow that supportive advisor base and we want to focus on the deposits in ANP Bank Go. From an innovation perspective, We want to continue on the journey that we've demonstrated in retirement. We know that Australians need income solutions. We think we're best placed to deliver those. We want to focus on advisor efficiency as we've been doing, enabling them to focus and grow their customer base. And we know the next years will be changed. That's inevitable. We want to leverage what we've built with AI. As I said, 95% of staff are using it and we're now starting to deploy agents across the organisation. But we want to use our partners wisely because they have skills that we as a small company cannot hope to build. And on top of that, we want to continue to help the JVs experience the growth they've done so today. So AMP is in the next chapter. We have repositioned the business and returned capital to shareholders. We have restored our reputation to the highest level since 2008. We've resolved most of the legacy matters, including those from the Royal Commission, and we're leading in retirement innovation. Our platforms business is demonstrating strong growth, and the S&I business is turning around. New Zealand continues to perform, and the bank is doing what we've asked of it, focusing on return on capital. So we are demonstrating strong growth. I believe we've got a great team in play and that we're ready to be able to deliver on the achievements of the last year. So on that note, I'll ask the operator for questions.

To ask a question now, please press one and one on your telephone and wait for a name to be announced. To withdraw your question, please press star 1 and 1 again. There may be a short pause while we compile the Q&A roster. Once again, the star 1 and 1 on your telephone keypad. We will now take our first question from the line of Julian Braganza from Goldman Sachs. Your line is open, Julian. Please ask your question.

Good morning, guys. Just a first question for me. Just on the China partnerships, obviously it was very, very strong over the second half period, about $45 million. Can you maybe just touch on if there were any one-off impacts in that number that led to the strong growth? And also, or alternatively, should we be expecting continued growth from these levels into 2026? Yes.

Yeah, thanks for that question, Julie. And there were no particular one-offs in the year. We're just seeing strong growth in that Pillar 2 and also the emergence of the Pillar 3. I mean, there is continued government support for personal savings in China. So we are expecting the growth of 10% through the cycle to continue. And obviously, we remain pretty optimistic about that investment.

Okay, got it. That's clear. And then maybe just in terms of the bank, if you could maybe just touch on the moving parts in the NIM from second half 25 going into FY26, just how you're thinking about it, and also just the expected benefit from the additional deposits, the $1 billion deposits that you're expecting in goal. How does that benefit the NIM into FY26? Thanks.

Yeah, thank you, Matty. I'll let you go through that.

Yeah, absolutely. Obviously, you can see there was a little bit of softening in NIM in the second half, rather than the first half, but we did achieve a year-on-year improvement slightly in NIM, and I think it's broadly in line with our guidance. In terms of the mix issues, we obviously benefited from a shift towards more saver-style deposits and away from the very rate-sensitive term deposits that we saw. But there was also a broad mix change in the way we funded the bank. So we were using securitisation more. There was obviously very positive conditions through the year. That allowed us to run off some of the very rate-sensitive turned deposits. You can see that in some of the mixed scrapes. So they were positives. I think what you see in the walk, though, is also some downward pressure. And there are a couple of key things going on, as I mentioned. There was a one-off and rather unique scenario in terms of the the replacement of the AT1 instrument. That had an impact of about two or three basis points downward in NIM, which is obviously a one-off impact as it replaced that with a Tier 2 instrument. And also, we began to utilise, again, some wholesale funding to give us more capital relief on assets that have high risk weighting. So that is part of our strategy to drive capital release from the bank. And so when we think about margin as we go forward, That's important to us and we're obviously guided to that range, but critically it's about capital release from the bank and so we will continue to explore different balance sheet strategies to allow us to liberate more capital out of the bank back to the group.

Yeah, I think it's important to highlight that for the bank, return on capital, whilst we have to guide towards NIM, return on capital will be the measure we'll be measuring success against.

And, Julian, just to pick up the final point of your question, which was on the GO I mean, the goal we've got of a billion dollars of GO deposits in FY26 is an important, you know, scaling, I would call it a scaling proof point. The maths, you know, I think quite obviously would suggest that that's not going to have a hugely impactful impact on the total NIM position. We've always indicated that we expect that to be more meaningful in FY27, but undoubtedly every dollar that we can really critical to us. As I said before, the focus on balance sheet management to release capital is the most potent component in terms of levers we've got right now as we look at FY26 for the bank, with Go continuing to scale over the top of that.

Okay, now that's clear. Then maybe shifting to the platform business, I know in the past you've talked about opportunities to help stabilise the margin and offset some of the mix impacts. Can you maybe talk to those options? Because at the moment, the margin is being diluted. But I just want to understand if there's any initiatives being put in place to support that margin, or have they already been done and that the underlying margin is actually weaker, X those initiatives? Thanks.

Yeah, thanks. I mean, I think it's clearly a very competitive space in the platform space. There's many things that we're looking at and I think we do have the advantage of having an investment management capability internally as well as the administration. So that does give us some options. I mean, you know, there's things we're looking at with the trustee right now. We've got to have that best interest duty always in mind when it comes to customers. But I think if you look at our cash rates, we're clearly the most competitive in the space both from the fees and returns. So we're continuing to see if there's new developments we can put in place there. And just looking at the investment management capability, as we've improved performance, how can we make sure that we're more part of those managed portfolios and all those things are happening as we speak.

Okay, and that's not factored. Is that factored in your guidance for next year?

Like when we're thinking about guidance, we're thinking about all of those things, but clearly we want to make sure we can deliver the guidance We'll constantly be looking for upside, but we absolutely want to make sure we can deliver within that guidance.

Okay, got it. Okay, excellent. Thank you so much for that.

Thank you. We will now take our next question from Andre Snacknick from Morgan Stanley. Please ask your question, Andre.

Morning. Oh, afternoon, sorry. Can I ask my first question just around slide 21? Talking about, I think, almost 100 new advisors added in the second half that are using, starting to use North, maybe over 100 for the year, you know, at $50 million per advisor, does this imply there's, you know, $5 to $6 billion additional flows that could be coming through? And how are you thinking about, you know, some of your advisor relationships and penetration?

Yeah, thanks for that question. I mean, clearly we want to continue to grow advisors, and as you said, we want to continue to grow advisors that support us. For us, we've designated that an active advisor has got greater than $1 million in assets under advice. Many others use different metrics. The important things for me is that we continue to grow that number because we know we don't see flows from new advisors probably to about 12 months after we've started to interact with them or flows of any significance. And I think the benefits you're seeing in our platform's business today being that $5.1 billion is really the hard work signing up advisors and showing them our solution over the last couple of years. So that is a really important number for us. Guessing whether that's $5 billion, $10 billion, $2 billion is a little hard, but I certainly want to see the flows grow or the net flows grow from the $5.1 billion today. I would say that it's also important though that we keep support from those existing advisors, particularly Acumen or the ex-AMP, and we're seeing that support continue right now. And even in the recent surveys, we were top two in terms of those advisors that use us as a lead platform. We've just got to keep on delivering on this solution. And I think with the recent change in our sales team, we can be a bit more aggressive yet again on the sales front because we know that we'll see benefits come through in the following 12 months.

Thank you. If I can ask a follow-up question around the flow schematic. So I know that NetWealth and Hub give guidance on flows, more revenue margins, whereas you continue to stick with this view of giving the revenue margins but not on flows, despite showing very clear pipeline and improvement trajectory and flows. So why wouldn't you consider giving guidance on flows?

Yeah, look, we can consider that but I think for the size of our book, which is large, relevant to the flows, it's still the size of the book and the margins that make more difference for the future. I mean, as we continue to build on that flow, and if we've got $10 billion next year, we can have another look at it. But, I mean, we believe right now the margin and the total AUM are better things for shareholders to be able to predict the future.

Thank you. And maybe one final question just around managed portfolios. So managed portfolios, I think you mentioned, is one of the reasons why the platform revenue margin is heading lower. But that's just the revenue margin. Can you talk about the profitability of managed portfolios and also some of the other benefits of driving growth there?

Yeah, I'll maybe pick that one up, Andre. You're absolutely right. I think, I mean, the profitability signature of managed portfolios is still really positive. It just is a... But for us, there is a mix issue as we come out of traditional managed funds. But we see the growth being in managed portfolios. I think the thing that we see that is the value-add component for managed portfolios is the same as advisors see. The simplicity of managing clients in that managed portfolio construct has the potential for them to therefore manage more clients and more volume per advisor. And that's a key metric for us because we know advisors – are in short supply across the market. So the extent to which we can deliver efficiency benefits to advisors allows them and their practice to manage more clients and therefore drive more revenue. And there's kind of two key levers in that, one being the managed portfolio construct, and we've got a really diverse range of those managed portfolios. And as Lex mentioned earlier, there is clearly an in-house investment capability that gives us opportunity to participate in those managed portfolios. And then the work that Edwina and the team are doing around digital tools, AI and so forth will run in companion with that to drive that efficiency factor.

Thank you.

Thank you. We will now take our next question from Lafitani Sotirio from MST Financial. Please ask your question, Lafitani.

Can I start with a follow-up on Andre's profitability question on the investment platform? Just so we're clear, so yes there is lower revenue margin coming through from the managed account side but is the EA margin the same for revenue being generated or is there an offsetting because of the scale benefits and then the automation benefits, have you got less costs that you're needing to invest in the process?

Maybe I answered that last. Thanks for the question. We've absolutely got the capacity to continue to invest in the north platform. So that's factored into our plans. And from my point of view, the growth and the way that's growing through those different product components doesn't give us any concerns in terms of the cost signature in the business.

But the profitability from, say... as it shifts across and if the mixed shift continues as it is into the next couple of years, do you anticipate continuing to be able to grow the earnings?

Yes, we do, categorically yes. I think we've demonstrated that we can deliver growth. Yes, there has been margin reduction over the last few years but I think that's been tempered by the growth in the volume which has helped us contain the variable costs and we want to continue to make sure we can grow there. I would say again we've got investment management capability as the returns improve. We've got greater opportunities to make that part of the managed portfolio and there's some other ideas we're working on at the moment to improve margin. So I'm not saying it's not a competitive environment, but I think we've got the foundations in play to make sure that we can build profitability and clearly growth is an important component of that.

Yep. Got it. Can I move on to the bank now? So it was about nearly three years ago, two and a half years ago, you mentioned the initial change in bank strategy and and investing in the guideline, the timeline given to us at the time was around three years before you started seeing some returns and you're saying that the focus is on return on capital and the return on capital was probably 6% to 7%. Now it's down to 4% handle. So what is the key focus now? What are we looking for? What are the hurdles that we need to see to see that materially improve?

Yeah, let me point out a few things. Firstly, you're right. We announced about 18 months ago that we were going to launch AMP Bank Go. We, in fact, launched that in 25 for all the reasons you said. We needed to have a diversification in funding and a cheaper base of funding, and that's the whole purpose of AMP Bank Go. Our criteria for the bank very clearly state is return on capital. If you look at the bank, that's why we're not growing the volume of lending. And in fact, the return on capital from last year in the bank traditional has grown from 5.2 to 5.7 for that reason. I think the other thing I would point out is there is quite a bit of innovation happening in the balance sheet space in the market at the moment. You can see we've pulled down our risk-weighted assets, which gives capital relief in the bank, and we'll continue to look at new opportunities for that but nothing has changed from what we announced. We expect 25 to be the execution and 26 and 27 for AMP Bank go to be about filled when you'll start to see the benefits.

So what's the target ROE or return on capital that you think you can get to in the next two years? So you're sitting at 4.4 in the second half.

Well, as I've said, the benefits would start to flow through the end of 27. I mean, we're in a fairly dynamic market now when it comes to capital and it's got to be in relative to the cost of capital, which is why return over cost of capital becomes the most important measure. I would see accretion in that 27 year.

But even 50% accretion from here is still well below your cost of capital, right? So what kind of accretion are you expecting in the next year? This is a long time for the market to wait for you to get a turnaround on the bank. Are you a natural owner in having a bank? So historically we asked you two, three years ago, why do you own the bank? What's your competitive advantage? and you couldn't articulate one, right, and you still haven't shown it yet. So why should the investor community or shareholders continue to sit back and watch, you know, money being torched going into the bank?

Yeah, Laf, I think that's a fair question given the current environment but I would say a couple of things before I'll ask Blair to comment on the ROC that you questioned. Firstly, I think We're always looking at opportunities. That's the role of us as a management team. That's the role of our board to continue to look at the best mix of portfolio. And AMP Bank Go firstly gave us options in terms of cost of funding and it gave us options in terms of something else in the toolkit that we didn't have. Because I remind you before we just lent and we took deposits at a high margin and I think We're just continuing to execute on that. But we're very well aware of the return versus the cost of capital, and it's something that is discussed frequently. I think the other thing I would point out, as you can see in the results, we are starting to release capital from the bank by utilising better balance sheet management, and we'll continue to do that. I'll let you comment on the returns, Blake.

Yeah, I... Absolutely take your feedback, Lev, and they're valid points. I think that clearly our focus on improvement is return on capital in the foreseeable future because, as you point out, frankly, it's not an acceptable level for us and we don't want to be in a situation where we've deployed capital on that return. So improving return is critical. I think the other immediate lever right now, though, is also, frankly, reducing the amount of capital that is deployed against the bank. And as Lex was mentioning, We're exploring aggressively a range of options around balance sheet management because if you look at the capital deployed in the bank, I think there are clearly opportunities to release that back to the group and that will drive improvement at a group level while we continue to address the underlying metrics in the bank itself.

Can I move on to the inorganic opportunities you flagged potentially in scaling up in wealth? Can you give us some kind of framework as to what you're looking at? So in particular, are there capability gaps or can you rule out whether you're looking at stuff like Panorama or CFS at the moment?

Yeah. As you know, it's not about capability gaps that we might have today. I don't believe there's any glaring gaps in our portfolio, especially on the wealth side. But we're in a dynamic environment, and particularly in our platforms business, our primary objective is trying to make advisors' lives easier so they can focus on working with their customers. So if there's capabilities there that we can bring in that would accelerate what we can deliver to advisors, we will. And there's many opportunities we look at constantly in that space to bring in capability, but it would be about augmented. I mean, we, yeah, there is scuttlebuck in the market and there's change happening in the market. And, you know, we have to be completely open open about that. We are all aware of that happening. We are all aware that scale is important. I mean, are we specifically looking at some of those at the moment? We're always looking in the market, but there's not anything active happening and we have to listen to our shareholders when we consider any options like that. But we absolutely will look at capabilities.

And just finally with the buyback, given where the share price is now, could we expect that the relative investment now makes more sense? You had a discount to NAV to step in, or how should we think about what will actually trigger a buyback coming through? Because you've now put it on the table as a priority. And are there any asset sales that are being considered? So I remember in the past you talked about possibly selling PCCP. you've also toyed with is the bank core or non-core? Is there anything that you can talk to?

Yeah, well, firstly, let me talk about the buyback. I mean, we wanted to be explicit about the fact that if there was further capital returns above the announced dividends and the announced dividends both now and through 2026 and 2027, that it would need to be in buyback for all the reasons we've discussed. in relation to franking credit. So we wanted to be explicit about that. I mean, I think we've demonstrated that we've been pretty regimental about managing our capital over the last few years and giving back to shareholders where it made sense. And clearly share price is a very important component in thinking about capital management. And I know the board will be very focused on that. I'm not going to sit here and make any particular promises about that today, but clearly share price is an important component. When it comes to asset sales, I mean, we've been explicit in the past and I think in his statements today, Blair was pretty explicit about the fact that PCCP or the US real estate business is not strategic to us. It's certainly not a component that we want in the portfolio long term, but it's a good business and we want to make sure we get value out of that business. So at the right time, we will look to... do something in that space.

And the bank?

I mean it's not on the table at the moment for all the reasons I've talked about. I'm not saying it will never be on the table. I think the board and I are very responsible about the fact that entertaining all ideas that come through the door and if they make sense we would consider them.

Right, thank you. We will now take our next question from Nigel Peterway from Citi. Please ask your question, Nigel.

Good afternoon. Just a couple of questions, if I could, on the S&I business. I mean, in the first half, you did talk about seasonal impacts and, you know, the likelihood of the margin expanding second half. That obviously didn't occur. So can you explain why those seasonal impacts didn't come through as you expected?

Not sure we talked about the margin expanding, but... Well, by assuming flat guidance, you effectively implied it.

Maybe... No, I think we didn't talk about margin expansion, but we certainly were cautious about, you know, optimism second half. I think the key thing that has driven, you know, that margin position is obviously the AUM growth. As I highlighted, as you get... individual balances per client growing, that intersects with the fee caps and mix. And so that continues while it's great that we get AUM up and you can see the total profit number, which is great for S&I, that does have some impact on margin. I think that the reason I called out in S&I the gross versus net is that you could see equally the IMEs came down. So on a net basis, It's actually flat year-on-year, so that's encouraging. I think that, for me, holding that margin steady is a really important activity for the whole team, and particularly the management team within S&I. The critical factor beyond that, obviously, for us, is continuing to drive that improvement and vitamin as you talked to. We saw some seasonal factors in the first half. We want to continue the broader trajectory year-on-year and track towards that positive cash flow growth.

I got the impression there were seasonal factors due in the second half because I mean although yes okay you didn't say expanding it was implied because you said flat for the full year which meant it had to expand in second half yeah so the seasonal factors just seem to have they were on the slides in first half they seem to have dissipated yeah Nigel I think we've learned from using approximate because um

The top number tends to be taken, so try to be a bit more specific with our guidance this year.

Okay. Then maybe on flows in S&I. I mean, previously you've expressed a decent amount of confidence that you can get this business into positive flows. You were hopeful that sort of in particular the retention initiatives that you were deploying would facilitate that. I don't seem to see much confidence of that. in the presentation today, so just are you still confident of moving that relatively soon into a positive flow position?

I don't think we've changed from our ambition that 26 is the year that we'd like to turn to neutral fries, so I certainly have not walked away from that ambition. I'm not saying it's easy, but the ambition is still firmly on the table and we're all running towards it. I mean, we all know that the June month is a bit of an anomaly, but I think we've got all the elements in place to drive towards that.

Okay. And then can you also maybe just give us a sort of a bit of an update on how My North Lifetime is going and whether you've had any success in sort of being able to streamline the sales process to make that more readily attractive to advisors? Yes.

Yeah, you're right. We have because I think, you know, when we launched that product, we launched a product and we needed to spend a bit more time building the interaction and the education of advisors around that. We are starting to see growth in that now and maybe Blair has the actual numbers. I can't remember them off the top of the head. But I think the fact that many of our competitors are copying, whether they're executed on it or planning to deliver on it is an indication that we are starting to see flows in that space. It's not just the flows I'd remind you that we get from retirement, it's also the rest of the flows that come with the advisor community when they bring those products across but we'll just try and get you the exact numbers that we've seen in that space.

Yeah, the year-end position for Lifetime AUM, I think from memory, $764 million. So that's substantially up on where we ended, you know, 24, which I think was roughly 340. So we continue to see that scale. We made some changes in just subtly to the configuration of the product offer, which definitely improved flows in this year. Our expectation is that growth will continue as we go forward, but certainly a good growth rate on 25 numbers over 24.

Okay, thank you.

Thank you. We will now take our next question from Andrew Buncombe from Macquarie. Please ask your question, Andrew.

Hi, thank you for taking my questions. Just two from me. The first one, apologies if I missed it, but have you provided expectations for your loan growth in the bank in FY26? And if not, how are you thinking about it? Thanks.

Yeah, no change in our strategy there. It's margin over volume, so you could expect quite flat in terms of total loans.

Excellent. And then the other one from me was in relation to the outstanding class action.

were one or two comments to them in the slide back again today maybe if you can just give us a bit of an update how many are outstanding and the updated expected timelines on those please thank you yeah so just to remind you there was four class actions we had as a result of the royal commission we've come to a settlement arrangements on all four of those now they all haven't actually gone through the court process yet and we haven't paid all the proceedings, but with agreed settlements, so I would expect that they would be complete during the 26th year. There was one new class action that came to the party in 25. I don't expect any real details or progress on that for some time. I'm talking years, Andrew.

Yep. So other than that new one, have provisions been made for all of those other ones before the balance date of 31st December 25? Or is that still to come? Thanks.

No, we provided for all of those in the 25 accounts because we actually got to an agreement in relation to settlement. And in fact, we put out ASX releases when we actually did those. As I said, the only thing that's to... to complete is payment, but we've also allowed for that in our cash balances.

Yeah, if I could just clarify that, Andrew. In the capital position on slide 35, when you look at the group cash pro forma, we've adjusted that so that it accounts for the sort of cash we're holding for the pay away once it goes through the court process this year.

Excellent. That's it from me. Thank you.

Thank you. Our next question comes from... Siddharth Paramuswaran from J.T. Morgan. Please ask your question, Siddharth.

Good afternoon. Just a question just on competition in platforms on pricing and incentivization of advisors or just preferential pricing. Just want to get your perspective of whether competition is increasing on the competition in the platform space. I think we've seen a little bit of revenue margin compression across the board. I take your point that there could be some investment mid-shifts and maybe just the growth of the managed account section is having an impact. But maybe if you could just provide some colour around pricing in particular in the market and what you've done and what's in your guidance for next year.

Yeah, I don't think the pricing has got any more or less over the last few years than it is today. So I I'm not sure it's price that we're actually competing on at the moment. As you said, it's more a mixture issue, but certainly remains a very competitive space. But I'm not seeing too much pressure from a headline price perspective.

Okay, so that's the same in your guidance for revenue margins into 26?

That's correct. Okay.

Yeah, okay. Just a question on variable costs of the percentage of AUM. They seem to be coming down again. Just wanted to get a bit of perspective on what's happening there and what the outlook is.

Yeah, Blair, do you want to take that one?

Yeah, I mean, there's obviously mixed issues in there in terms of IMEs as well as some other components like brokerage expenses and the like. So, you know, they largely are a function of actions by clients in terms of mixed choices, which flows through our meetings, and the related variable costs associated with that, particularly things like brokerage.

Okay, thank you very much.

Thank you. Next is a follow-up question from the line of Andre Steknik from Morgan Stanley. Please go ahead, Andre.

Can I ask just around the NIEM guide for the bank, have you considered the current, so just the recent interest rate increase in that and have you allowed any further cash rate increases?

No, we probably didn't allow for that but let me make a comment about our bank. Because to date we're largely, we get funding through deposits and we lend, we kind of sway on both sides, which is the whole reason for creating AMP Bank Go, because today we don't have a large amount of transaction accounts that have little interest rate on them. So a rate change for us is probably not as important as it might be to some other players.

Thank you.

And look, Paul, my second question... It fits both sides of the balance sheet.

Roger that, yeah. And look, another question if I can, just in terms of capital management, can I ask, like, you know, how quickly could you, you know, could you move on buybacks? And also, why would you give guidance for flat dividend for two years? I mean, does that not imply, like, that you're not even expecting to grow earnings? Like, why would you give, you know, flat dividend guidance all the way two years out, which is incredibly unusual, I think.

Yeah, let me just make a comment on that and then I'll ask Blair to comment on the capital. Why have we given that guidance on dividends and why it's been so explicit about buyback? It's because we wanted to give consistency around the franking credits and we don't at this point have a large pool of franking credits. So that's why we've given a consistent dividend. That does not mean that we would not give capital back to our shareholders But the preferred method above that $0.02 would be through a buyback. For those reasons, the franking credits. Blair, is there anything else?

Yeah, no, absolutely, Lex. I think, take your point, Andre, it's a little unusual, but I think the very small franking credit balance we have definitely influences that view. And, you know, obviously, I think we've had, you know, pretty clear feedback that, you If we have surplus capital and there's not a compelling, and I would stress compelling, alternative use of that, then absolutely we want to return that to shareholders. In terms of timing, well, there's just procedural things to go through, but that's all manageable in terms of if the board concludes that view, then we just set about that process.

I am showing no further questions. Thank you all very much for your questions. I'll now turn the conference back to Alice for closing comments.

Yes, thank you very much and thank you for everybody for listening in today. I don't think any of us are immune to the shareholder reaction today. We certainly take that into consideration but I want to reiterate that I think these are a credible set of results and we've delivered on our promises and I feel proud of what sits in front of us today. So thank you everybody.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect your lines.