AMP reports 1H23 losses for advice division

AMP’s advice division has reported an underlying NPAT loss of $25 million as the firm releases its half-year results and sets aside a provision of $50 million for the BOLR class action. 

In its half-year results for the six months to 30 June, the firm reported an underlying NPAT loss of $25 million, although this was a 16.8 per cent improvement on 1H22 when it lost $30 million. For FY22, advice losses were $68 million.

AMP said this was driven by continued focus on cost efficiency with a 9.1 per cent reduction in controllable costs.

The firm said half of practices in its advice network are generating over $1m in revenue. 

Focus continues on transforming the advice business and its efficiency as a priority for FY23-25 as well as further reductions in advice costs.

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In the platform space, underlying NPAT was $44 million, up 25 per cent on 1H22.

A focus on independent financial advisers meant 31 per cent of inflows on the North platform came from IFAs and average assets under management was $67.3 billion. 

Platforms saw net cash inflows of $741 million, down from $1.3 billion in the previous year, which was impacted by cyclical factors and economic conditions.

Overall AMP Group statutory NPAT was $261 million which it said reflects a net gain of $209 million on the sale of the international infrastructure equity business, the real estate and domestic infrastructure equity business and the sale of SuperConcepts.

Regarding the Federal Court case about buyer of last resort (BOLR) class action proceedings, it said it is “currently considering its position with respect to the decision as to whether to appeal”.

However, it has set aside a provision of $50 million for the half year, reflecting a current assessment of the potential liabilities related to the advice practices that were the subject of the judgment. 

It expects to receive an update from the Court later this month as to whether there will be another hearing or final orders issued. 

Alexis George, chief executive of AMP, said: “The performance of our underlying businesses continues to improve, with AMP Bank achieving disciplined mortgage growth in a competitive environment, the North platform significantly increasing inflows from independent financial advisers, advice further reducing costs, and Master Trust operating more efficiently and delivering strong investment returns for members.

“We have booked a $50 million provision in response to the judgment in the financial adviser class action. The process for the Court making orders from the judgment is ongoing and until finalised we won’t make a decision on any appeal.

“Given the current uncertainty around the Court’s judgment and other litigation matters, we are taking a prudent approach with our capital and liquidity and will pause tranche three of the capital return. We will review the decision to pause tranche three by no later than the end of the year. We remain committed to returning excess capital to shareholders and will not be engaging in large scale M&A activity in the near term.”