In its cashflow update for the first quarter of 2019, AMP Limited reported that its banking division’s loan book grew over the quarter from $20.01 billion in Q4 2018 to $20.14 billion in Q1 2019.
The wealth firm attributed the increase to “continued growth from the mortgage broker channel”.
AMP Bank also grew deposits by $218 million over the quarter to $13.5 billion in Q1.
Meanwhile, AMP’s wealth management unit booked an almost nine-fold increase in cash outflows in Q1 FY19, from $200 million to $1.8 billion, including $538 million of regular pension payments, which it said reflected expected continued weakness in inflows and higher outflows in the aftermath of the banking royal commission.
Assets under management (AUM) totalled $129.33 billion in Q1, up 5 per cent from $123.22 billion in the previous quarter.
The wealth management division logged net cash outflows of $1.77 billion in the quarter ending on 31 March 2019, compared with outflows of $200 million last year.
“We remain focused on transforming our business model in Australian wealth management to compete more effectively,” AMP chief executive Francesco De Farrari said.
“Actions we’ve already taken to improve outcomes for customers include fee reductions on our MyNorth products, which builds on the MySuper fee cuts we have delivered to clients in 2018.
“We’ll continue to modernise our products to put AMP in a position where we can win in the market.”
AMP Capital’s AUM rose 4 per cent to $194.6 billion in Q1, which was largely attributed to stronger investment markets.
During the first quarter of 2019, AMP Capital confirmed the sale of its 50 per cent stake in the management companies of AIMS AMP Capital Industrial REIT to joint venture partner AIMS Financial Group. The transaction resulted in a reduction of $765 million in its AUM.
AMP also recently appointed a new chief financial officer, John Moorhead, to replace Gordon Lefevre from 1 June 2019.
Commenting on the appointment, Mr De Farrari said: “As we change and reinvent AMP, he will bring the valuable international experience of leading finance in a complex and entrepreneurial business at Virgin Group, as well as strong industry experience from his time with Goldman Sachs and Fidelity International.
“He has shown his capabilities over the past year as CFO and COO of AMP Capital and has a strong understanding of the group and the Australian marketplace.”
Mr De Farrari said the group’s focus during the first quarter of 2019 has been on transforming the wealth firm, including establishing a new leadership team, progressing its remediation program, separating its life insurance businesses, and sharpening its offers to clients.
AMP chair David Murray admitted during the wealth firm’s annual general meeting on Thursday (2 May) that AMP was “shown to have faltered from its purpose” last year.
The 170-year-old company has been embroiled in allegations of misconduct, including charging customers fees for financial advice that was never provided.
AMP and its lawyers, Clayton Utz, in March succumbed to the Australian Securities and Investment Commission’s request to hand over “internal file notes” from interviews with past and present employees in relation to fees-for-no-service breaches and providing “false and misleading statements” to the corporate regulator.
Costs associated with the royal commission, portfolio review, customer remediation and risk management changes, among other factors, had weakened AMP’s profit in 2018. AMP reported a 96.7 per cent year-on-year decline in its statutory net profit in the 2018 calendar year, from $848 million to just $28 million.
However, Mr Murray said he was “encouraged by the latent goodwill towards our business”.
“It’s clear that people want and expect us to re-establish AMP as a strong player in the Australian financial services landscape,” he said in the AGM.
“There is no quick fix, but with the right leadership, capability, systems and customer focus, we intend to turn this business around.
“We will put the past behind us and build the new AMP.”
[Related: AMP profits shrink by $820m in 2018]
Tas Bindi is the features editor on the mortgage titles and writes about the mortgage industry, macroeconomics, fintech, financial regulation, and market trends.
Prior to joining Momentum Media, Tas wrote for business and technology titles such as ZDNet, TechRepublic, Startup Daily, and Dynamic Business.