AMP sees major potential to grow its mortgage business through the third-party channel, despite recording minimal mortgage growth in the first quarter of 2016.
AMP Bank’s mortgage book increased 0.7 per cent to $15.3 billion at the end of the first quarter of 2016, from $15.2 billion in the final quarter of 2015.
“The AMP aligned adviser channel contributed 22 per cent of AMP Bank’s new mortgage business, impacted by lower investor lending growth in Q1 16,” the bank said in a trading update.
AMP chief executive Craig Meller said domestic and global investment market conditions continued to be challenging during the first quarter, subduing cash flows across the business.
“Ongoing claims volatility continues to be a feature in Australian wealth protection. Despite these challenges we remain confident in the overall long-term outlook for AMP,” he said.
For the three-month period ending 31 March 2016, AMP’s wealth management division reported a 38.9 per cent drop in net quarterly cash flow, from $342 million to $209 million.
At the group’s annual general meeting, Mr Meller said AMP Bank is central to the group’s customer strategy, with debt management and mortgage solutions “a very important way that we help customers achieve their goals”.
In the past six years, AMP Bank’s contribution to the overall group’s profits has tripled, Mr Meller said, and today represents almost 10 per cent of its operating profit.
“Its return on equity is in line with larger competitors, and it has evolved to become a core part of our value proposition to customers and advisers,” Mr Meller said.
“We see significant potential to grow the bank further through both mortgage brokers and our own financial advisers, and this year we’ll launch a new banking solution that will help customers manage their money much more effectively.”
[Related: AMP makes rate changes]