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AMP reports 9% rise in home lending

The banking arm of AMP saw its residential mortgage book increase to $22.4 billion, or 9 per cent, in the first half of its financial year.

AMP has announced its financial results for the half-year 2022 (1H22), showing that its residential mortgage book grew by 8.9 per cent on 1H21 (or 6.5 per cent on an annualised basis).

Its home loan book increased to $22.4 billion from $20.6 billion last year. When looking half-on-half, the book rose by $705 million – which AMP said was 1.15x system.

It suggested that this was driven by continued service improvements and “competitive pricing”.

Around 68 per cent of customers were owner-occupied, and the average book loan-to-value ratio (LVR) dropped by a percentage point to 66 per cent in the half (with a dynamic LVR of 59 per cent).

Nearly two-thirds (64 per cent) of AMP Bank mortgage repayments were ahead of schedule by at least one month as at 1H22, with 31 per cent being more than a year ahead.

Its share of interest-only lending has dropped from 17 per cent to 14 per cent of the total book as a result of “active management”.

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AMP also flagged that it improved its customer time to yes” by 33 per cent, and rolled out new technology for brokers such as e-signatures and digital verification of identity, which also sped things up.

While the mortgage book of the lender grew, AMP reported that the underlying net profit of AMP Bank dropped 45.2 per cent to $46 million.

The net interest margin (NIM) of AMP Bank fell from 1.62 per cent to 1.32 cent, which AMP said was driven by its “deliberate decision to slow applications in Q2 22” that led to “mortgage margin compression”, compounded by growth of fixed rate loans and holding higher liquid assets.

It outlined that applications have increased in Q2 and that NIM began to recover due to the increasing interest rate environment and the bank’s continued focus on optimising deposit and funding costs”.

Total deposits were up 12 per cent to $20.0 billion.

“AMP Bank continues to show its competitive strength as a digitally-enabled challenger bank with above system mortgage growth, while maintaining disciplined focus on credit quality,” commented AMP chief executive Alexis George.

A disciplined approach to managing the loan book in a challenging market environment was also flagged.

Looking forward, the bank said it will focus on its digital mortgage offering to consumers (through its partnership with Nano), which reportedly enables unconditional loan approval in 10 minutes. 

The AMP Essential Home Loan has now opened for refinancers.

It will also look to invest in further tech enhancements for the third-party channel to improve turnarounds by a further 20 per cent.

Ms George commented: We have had a controlled launch of our new digital mortgage with a full roll out later in 2022, which will enable unconditional mortgage approval in as little as 10 minutes.

“We have built strong momentum on the transformation of AMP into a simpler and more efficient organisation which is well placed to grow...

“The first half of the year has seen a challenging economic backdrop. Despite the decline in investment markets, our business is well positioned with a robust balance sheet that will help us to drive forward through a period of continued economic uncertainty.

“AMP is entering its next era as a significantly simplified group, leading in wealth management and banking, and guided by a clear purpose – helping people create their tomorrow.”

[Related: AMP partners with Nano for new digital mortgage]

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