New AMP boss eyes broker channel

AMP released its results for the first half of the year on Thursday morning, revealing a 29 per cent drop in statutory group net profit after tax (NPAT) year-on-year to $146 million.

While underlying profit fell across the wealth and asset management businesses by 17.2 per cent to $48 million and 18.7 per cent to $61 million, respectively, AMP Bank managed a 76 per cent surge, up to $88 million for 1H21.

S&P Global Ratings noted the bank contributed around 40 per cent of AMP’s profit during the half year, in contrast to its 25 per cent piece the year before. The credit agency forecast AMP Bank will become an even larger part of the group, as the demerger of asset management arm AMP Capital progresses.

AMP Bank’s first half result had mostly been boosted by the release of $12-million credit loss provisions as it reacted to improved COVID-19 conditions earlier in the year.

Loans had also spurred its growth, with the residential mortgage book increasing by $431 million to $20.6 billion (4.3 per cent annualised growth from FY20) and making up the bulk of AMP Bank’s total loans of $20.7 billion. The remainder of total lending consisted of $355 million in practice finance loans to AMP-aligned advisers (down by 18 per cent year-on-year).

Almost all of the growth in the mortgage book had flowed in through the broker channel, with broker-written loans representing approximately 90 per cent of new business. Of the total mortgage book, around 80 per cent came through brokers.

Having completed her first week and a half at the group, AMP chief executive Alexis George told Mortgage Business that the broker channel will continue to be a “big focus” for the bank, as she moves forward.

“I think when we talk about the broker space, what’s clear for me is what’s important to [brokers] and their customers, and our customers, is certainty and consistency around decisions. And that’s what I really want to focus on,” Ms George said.

“And… making sure that we can continue to build that digital interactions so our customers know what’s happening. We do see a real opportunity to grow the bank, most of that will be in the broker space.

“There’s still a really competitive market out there, I acknowledge that. But I think there’s an opportunity for us there, and I think the broker space will be a big part of that.”

AMP Bank recently hired former MyState lending distribution head Paul Hebert to be its new head of intermediary distribution and governance, tasking him with driving mortgage growth and expanding the broker channel in key locations.

The bank was also said to be on a recruitment drive in Victoria, with plans to strengthen its state team.

In its investor presentation on Thursday, AMP stated the banking segment had invested in streamlining and ongoing enhancements for broker initiated home loans, including progress on electronic signatures and identity verification.

During the second half of the year, AMP Bank has signalled that it will continue to invest in automated credit decisioning and its direct capabilities, while it works on the design of an end-to-end digital direct home lending offering, to be built next year.

But for now, Ms George’s priorities for the overarching group include restoring trust in the embattled AMP brand and reforming its culture, as it carves out AMP Capital.

“As we move towards that demerger, together with Shaun Johnson, our CEO of AMP Capital, I really need to lay down, what is this company going to look like in the future?” Ms George said.

The group also held off on an interim dividend for shareholders, opting to stay conservative with capital as it ventures along its transformation strategy.

[Related: AMP hires retirement solutions head]