AMP NZ saw net profits decline by almost 18 per cent in 2022 as poor investment markets overwhelmed steadying fund flow dynamics and margin improvements post the shift to BlackRock index funds.
The NZ wealth management business net profit after tax last year fell to A$32 million last year from A$39 million while topline revenue – dominated by KiwiSaver and superannuation products – dropped to A$125 million compared to A$150 million for the 2021 calendar year, according to the AMP group annual report released last week.
Income linked to funds under management (FUM) for the AMP NZ arm was off almost 21 per cent in 2022, shrinking to A$92 million from A$116 million in the previous 12-month period.
The FUM-based revenue was hit by both a significant decline in assets under management (down more than A$1.7 billion over the year) and fee reductions introduced along with the transition to a BlackRock-managed index strategy for most of the AMP KiwiSaver and super funds late in 2021.
However, AMP did manage to limit NZ fund net outflows last year to A$126 million – a big improvement on the A$1 billion fund drain in 2021 that took in the loss of KiwiSaver default status. The AMP KiwiSaver booked net inflows of A$136 million while the group’s other super and investment funds bled A$262 million (again, an improvement on the A$391 net outflows in 2021).
Despite restraining outflows, investment losses of almost A$1.6 billion dragged the AMP NZ revenue and profit down over the year.
As at the end of last year, AMP NZ held total FUM of almost A$10.5 billion compared to close to A$12.2 billion 12 months prior.
The 2022 accounts also show AMP NZ cut investment management costs to A$15 million for the year compared to A$23 million in 2021. AMP NZ converted the majority of its in-house funds to BlackRock-managed index strategies after dumping then sister firm, AMP Capital NZ, in August 2021.
By comparison, the AMP NZ investment management expenses for 2020 (the last full year using AMP Capital) amounted to A$28 million on FUM of A$12.2 billion.
Aside from investment revenue, AMP NZ reported other income of A$33 million (about flat year-on-year) over 2022 from its general insurance and advice divisions. The NZ advisory business generated a net profit after tax of A$12 million (A$14 million in 2021).
NZ adviser numbers (now all classed as employed following the full AMP buyout of the AdviceFirst business) stayed about par year-on-year at 54.
Alexis George, AMP group chief, says in the 2022 report: “Our New Zealand business continues to deliver a stable performance.”
And after years of instability in the wider business, she says AMP is settling down into its new “simpler” format as devised late in 2021.
The simplification plan proposed by George soon after she assumed control of AMP from former chief, Francesco De Ferrari, in August 2021, saw the more than 170-year old company divest its funds management arm and dramatically restructure the Australian advice network.
With the AMP Capital sale almost complete, George says the business can now focus on growing its priority areas of the bank and Australian wealth management (advice and platforms).
“These critical parts of our strategy will deliver a business that is robust, growing and delivers long-term value to shareholders,” she says.
According to an investor presentation delivered along with the results, the business would “continue to review portfolio assets to ensure AMP is the right owner”.
The AMP wealth management unit reported a net profit of A$50 million, down almost 44 per cent from the A$89 million 2021 result on the back of ongoing net outflows and a A$68 million loss from the advice arm.
But the figures show the troublesome Australian financial advice business pared losses significantly from the A$146 million deficit in 2021.
Overall, AMP turned in a net underlying profit of A$184 million (A$280 million the previous year) led by the bank result of A$103 million, which bumped up to A$387 million following asset sale proceeds and contributions from some AMP Capital “discontinued operations”.
AMP declared a final dividend for the year of A2.5 cents per share, contributing A$400 million to its ongoing plan of returning A$1.1 billion to shareholders. The group embarked on a A$350 million share buyback last year with “further capital management initiatives of up to A$350 million” on the table.
Following the results the AMP share price slumped about 15 per cent to close at just over A$1.13.