[PDF] - full year results full year results full year results full full year PDF Document

SLIDE 1

AMP results presentation

FULL YEAR RESULTS 2010

full year results full year results full year results full full year results full year results full year results full

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2010 full year results

Craig Dunn Chief Executive Officer Paul Leaming Chief Financial Officer 17 February 2011

2

Executive summary

Operating result reflects robust performance in CWM and solid

results elsewhere offset by negative claims experience in CWP

Disciplined operating cost control enabled continued investment

in growth initiatives

Growth investments have positioned company well ahead of

regulatory change, driving:

more productive planner force, with strong growth in AMPFP planner

numbers

simpler, transparently priced products with encouraging new

business flows

growing investment management footprint in Asia
Capital position further strengthened ahead of changing APRA

standards

Proposed AXA merger progressing to plan

SLIDE 3

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3

Outline

Group overview
Business line review
Financial overview
Outlook and strategy

4

Key performance measures and dividend

Underlying profit A$760m, down 2% on FY 09 (A$772m)
Growth measures:
Net cashflows in AMP Financial Services A$789m, down from

A$1.7b; AMP Capital Investors external net cashflows A$2.6b, up from -A$1.1b in FY 09

Value of risk new business* up A$6m to $108m
63% of AMPCI’s AUM met or exceeded benchmark over

12 months to 31 December 2010

Underlying return on equity 26.2% (FY 09 31.6%), reflects

prudent approach to capital management

Final dividend of 15cps, 60% franked, represents payout of

83% of 2H 10 underlying profit; full year dividend 30cps (FY 09 30cps)

* Combined value of new business (VNB) measure for Australian Contemporary Wealth Protection and New Zealand risk insurance.

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5

Overview – FY 10 profit summary

+5% 739 775 Net profit attributable to shareholders of AMP Limited 1. M&A transaction costs in FY 10 principally relate to the proposed merger with AXA Asia Pacific Holdings Limited. See p40 of FY 10 Investor Report. 2. Principally comprise release of prior year tax provisions offset by one-off and non-recurring costs. 3. Represents the abnormal writedown of seed pool assets, in FY 09 primarily Singapore industrial property and an Australian retirement village business. 4. Relate to accounting gains / losses that do not reflect underlying profitability of the group and should reverse over time. See p41 of FY 10 Investor Report.

(14)

(7) Market adjustment – risk products4

20

22 Market adjustment – annuity fair value4

1

Loan hedge revaluations4

(1)

22 Accounting mismatches4

20

(2) Other items2

(30)
Seed pool valuation adjustments3
(13)

(5) Market adjustment – investment income Steady 16 16 AMP Limited tax loss recognition

0.3%

739 737 Profit after income tax before timing differences

2%

772 760 Underlying profit +1% (71) (72) Interest expense on corporate debt +3% 126 130 Underlying investment income

2%

701 686 Total operating earnings +8% (37) (40) Group office costs

2%

738 726 BU operating earnings

4%

91 87 AMP Capital Investors +7% 54 58 AFS New Zealand

7%

151 140 AFS Mature

16%

164 138 AFS Contemporary Wealth Protection +9% 303 AFS Contemporary Wealth Management % change FY 09 FY 10 A$m (5) 278

(10)

(16) M&A transaction costs1 6

Overview – assets under management

Average AUM Closing AUM A$b 122 129 105 112 115 60 80 100 120 140 FY 06 FY 07 FY 08 FY 09 FY 10 112 117 113 106 128

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754 808 806 778 805 58 63 73 59 79 400 500 600 700 800 900 FY 06 FY 07 FY 08 FY 09 FY 10 7

Overview – tight cost control while investing for growth

A$m 39.7% 41.3% 41.7% 43.3% 39.6% 72bps 68bps 75bps 79bps 78bps 812 871 879 837 884

CAGR 2% since FY 06

Cost to income ratio Controllable costs to AUM Project costs Operating costs 8

Business line review

SLIDE 6

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9

AMP Financial Services – FY 10 highlights

Delivered A$639m in operating earnings in FY 10

(A$647m in FY 09) while significantly repositioning the business

Strong performance in CWM and improvements in NZ
ffset by negative claims experience in CWP
34.7% cost to income ratio reflects ongoing cost

discipline, while continuing to invest in growth initiatives

Ambitious change program delivering simpler, more

transparent products, and transformed planner force with fee-for-advice capability well ahead of regulatory change

10

AFS overview – FY 10 cashflows

Cashflows reflected a subdued market, with market share marginally up
Total net cashflows of A$789m, down from A$1,661m in FY 09,

reflected

increases in outflows, because of higher customer account balances
reduced salary sacrifice contributions, following changes to the contribution

caps

These factors were only partially offset by
increased inflows from rollovers, reflecting higher AUM balances
higher member contributions
success of AMP Flexible Super
CWM net cashflows A$1,391m (A$2,189m in FY 09)
Persistency increased to 90.4% in FY 10 (90.1% in FY 09)
AMP Flexible Super total AUM A$1.4b – split between superannuation

and pensions; 21,000 customers; product working as designed for customers and shareholders

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11

AFS overview – update on Flexible Super

33% 26% 41% Core Select Choice

Product designed to extend reach into

younger customer base and attract SG contributions; balances will increase over time:

Total customers 17,000
One-third of Core customers aged 30 or younger
Average customer balance $33,000 (higher than

retail industry average)

Average customer balance of Choice customers

almost three times Core

Majority of flows from new superannuation

customers

70% of customers by number in Core or Select
Only A$90m in AUM sourced from closed retail

super product; well within AMP's assumptions for determining margin guidance

Employer plans represent A$18m of AUM, with

3,700 customers

AMP Flexible Super superannuation account – AUM (A$541m)

% AUM 12

AFS overview – update on Flexible Super

2% 14% 84% Core Select Choice

AMP Flexible Super retirement account – AUM (A$837m)

Designed to offer a more

sophisticated solution for retirement customers with more complex needs:

Total customers 4,000
Average customer balance $212,000
Majority of pension flows a result of money

transferred internally following closure of Flexible Lifetime – Allocated Pension

Strong flows to Choice option support

margin guidance % AUM

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7

13 50 100 150 200 250 bps

AFS overview – strong track record of managing margins

1H05 2H05 1H06 2H06 1H07 2H07 1H08 2H08 1H09 2H09 1H10 Investment-related revenue to AUM Operating earnings to AUM Choice of Fund introduced Lehman collapses

Five year change in investment-related revenue to AUM consistent with AMP’s past guidance
AMP’s investment related revenue to AUM guidance remains unchanged at around 3% pa decrease

across the cycle (in normal markets), subject to potential MySuper changes

Operating earnings to AUM reflects cost discipline and business model flexibility

APRA licensing changes introduced 2H10 AMP Flexible Super launched 199 201 195 187 186 186 182 183 190 184 180 177 52 51 52 52 53 55 51 45 52 54 51 50 160 170 180 190 bps 184 177

4
3
1
1

2 14

AFS overview – changes in investment-related revenue

2H 09 investment- related revenue to AUM Lower initial planner fees on contributions* Changes in investment / product mix Higher fee rebates Lower SuperLeader par profits Member account fees 2H 10 investment- related revenue to AUM No impact on CWM operating earnings * Reduction in planner fees attributable to lower new business volumes relative to AUM.

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8

493 503 506 479 482 50 50 54 50 63 100 200 300 400 500 600 FY 06 FY 07 FY 08 FY 09 FY 10 15

AFS overview – disciplined cost control

A$m 35.6% 34.2% 35.4% 34.0% 34.7% 77bps 69bps 75bps 76bps 72bps 543 553 560 529 545 Cost to income ratio Controllable costs to AUM Project costs Operating costs 16 Operating earnings to AUM1,2

AFS Australian contemporary wealth management

3bps

53bps 50bps

A$798m

A$2,189m A$1,391m Net cashflows +14% A$45.7b A$51.9b Average AUM (including capital)1

2 percentage points

42.9% 40.9% Return on equity 90.0% 44.9% A$340m A$278m FY 09 90.3% 42.9% A$344m A$303m FY 10

CWM

+0.3 percentage points Persistency +1% Controllable costs

2 percentage points

Cost to income ratio +9% Operating earnings Change 1. Based on monthly average AUM including capital. 2. Costs in this ratio exclude AMP Bank costs.

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17

AFS Australian contemporary wealth protection

FY 10 FY 09 Change Profit margins A$152m A$144m +6% Experience profits (A$14m) A$20m

A$34m

Operating earnings A$138m A$164m

16%

Profit margins / API1 19.4% 19.8%

0.4 percentage points

Operating earnings / API1 17.6% 22.5%

4.9 percentage points

Controllable costs A$93m A$75m +24% Individual risk API A$662m A$607m +9% Individual risk lapse rate 11.4% 11.1% +0.3 percentage points RoEV pre transfers @ 3% discount margin 13.6% 12.4% +1.2 percentage points VNB @ 3% discount margin A$101m A$100m 1% Return on equity 23.2% 30.1%

6.9 percentage points

.

CWP

1. Based on average annual premium in-force. 18

AFS Australian mature

Mature

FY 10 FY 09 Change Operating earnings A$140m A$151m

7%

Controllable costs A$58m A$60m

3%

Controllable costs/AUM1 32bps 32bps Steady Net cashflows (A$1,265m) (A$1,201m)

5%

Persistency 89.3% 89.5%

0.2 percentage points

AUM (pre-capital) A$17.3b A$18.1b

4%

RoEV pre transfers @ 3% discount margin 13.6% 17.1%

3.5 percentage points

VNB @ 3% discount margin A$14m A$21m

33%

Average capital A$433m A$390m +11% Return on equity 36.7% 43.4%

6.7 percentage points

1. Based on monthly average AUM including capital.

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19

AFS New Zealand

New Zealand

FY 10 FY 09 Change Profit margins A$58m A$65m

11%

Experience profits / losses A$0m (A$11m) +A$11m Operating earnings A$58m A$54m +7% Controllable costs A$50m A$54m

7%

Cost to income ratio 34.2% 37.9%

3.7 percentage points

Individual risk API3 A$115m A$117m

2%

Lapse rates 9.9% 11.6%

1.7 percentage points

Net cashflows A$201m A$235m

15%

AUM (pre capital) A$4.7b A$4.7b Steady RoEV pre transfers @ 3% discount margin1, 3 4.3% (10.1%) +14.4 percentage points VNB @ 3% discount margin3 A$8m A$16m

A$8m

Return on equity 22.2% 20.0% +2 percentage points 1. In NZ dollar terms, RoEV increased by 10.8% on FY 09. 2. In NZ dollar terms, individual risk API increased by 4% on FY 09. 3. New Zealand EV and VNB in FY 10 were impacted by a change in methodology to recognise recurring contributions on wealth management products as a movement in EV rather than VNB. On a like-for-like basis, 2010 RoEV would have been -0.6% (compared to +4.3%) and VNB would have been A$10m (compared to A$8m). 20

AMP Capital Investors – FY 10 highlights

Resilient performance through subdued market conditions delivered
perating earnings of A$87m, down 4% on FY 09 (A$91m)
Total management fees up to A$353m from A$341m
Increase in controllable costs reflecting continued investment in

growth initiatives

63% of AUM meeting or exceeding benchmark in 12 months to

31 December 2010

A$2.6b in external net cashflows (-A$1.1b in FY 09), including A$1.7b

from Japan and improved flows from domestic institutions into property and infrastructure

Controllable costs of A$281m, up 10% from A$255m, reflecting

continued investment in new market-leading operating platform and Asian expansion; other costs held tight

Investment program delivering new mandates, including good flows

from Asia

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21

AMPCI overview – FY 10 key financial results

AMPCI

FY 10 FY 09 Change Operating earnings A$87m A$91m

4%

Management fees – AUM based A$300m A$284m +6% Management fees – non-AUM based A$53m A$57m

7%

Total performance & transaction fees A$45m A$38m +18% Controllable costs A$281m A$255m +10% Cost to income ratio 69.0% 65.2% +3.8 percentage points External net cashflows A$2.6b (A$1.1b) +A$3.7b Return on equity 45.8% 60.8%

15 percentage points

56.0% 53.1% 56.3% 65.2% 69.0% 22

AMPCI – controllable costs and cost to income ratio reflect ongoing growth investments

281 223 257 255 268 150 175 200 225 250 275 300 325 FY 06 FY 07 FY 08 FY 09 FY 10 Controllable costs Cost to income ratio Medium-term cost to income ratio target (55-60%) Controllable costs A$m

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95.1 0.8 1.7 0.1 0.0 (0.5) (0.3) (1.9) 0.0 2.7 98.0 70 75 80 85 90 95 100 AUM at 31/12/09 Australian market flows Asian distribution channels NZ market flows Aus Mkt flows (other external) Australian contemporary AMP Group Australian run-off business NZ market flows Investment returns and

ther

AUM at 31/12/10 A$b 23

AMPCI – drivers of cashflows

External Internal (0.3) (0.2) AMPCI cash inflows are reported net of fees and taxes. AUM at 31/12/09 Australian market flows Asian distribution channels NZ market flows Rest of the world Australian contemporary AMP Group Australian run-off business NZ market flows Investment returns and

ther

AUM at 31/12/10 24 62% of AUM met or exceeded benchmark over five years 48% over three years 63% over one year % Indicates assets under management meeting or exceeding benchmarks over rolling one, three- and five-year periods to Dec 10. * Excludes Future Directions Funds. AMPCI managed* Multi-manager and Multi-Asset Group Target 75%

%

One-year rolling to Dec 10 Three-year rolling to Dec 10 Five-year rolling to Dec 10

AMPCI – performance against benchmarks

54 87 37 63 43 100 61 74 86 4 6 92 56 9 42 100 98 29 39 91 49 61 Asia-Pacific equities Asia-Pacific fixed interest Infrastructure and direct investments Australasian direct property International listed property International equities International fixed interest Diversified

SLIDE 14

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25

Financial overview

Paul Leaming Chief Financial Officer

26

Financial overview – key points on P&L

Net profit attributable to shareholders of AMP

M&A transaction costs mostly relate to AXA but also include a number of smaller

projects completed during the year

Subject to successful completion, integration costs will be reported separately from

1 January 2011

NPAT growth driven by tightening of credit spreads (annuities) and favourable

accounting mismatches

A$m 20 Market adjustment – annuity fair value (14) Market adjustment – risk products 739 (1) (5) 739 (30) 20 (13) 772 Seed pool valuation adjustments Accounting mismatches Loan hedge revaluations Profit after income tax before timing differences Other items Market adjustment – investment income Underlying profit FY 10 760 (5) (2)

737

22 (7) 1 22 775 FY 09 % change

+5%
0.3%
2%

M&A transaction costs (16) (10)

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27

Financial overview – balance sheet strength

Maturities 2010 A$m 2009 A$m Tier 1 Shareholder equity 3,046 2,706 Tier 2 Subordinated bonds 10+ years 83 83 AMP Notes 2 - 5 years 296 296 Subordinated loan to AMP Bank 2 - 5 years (100) (100) 279 279 Senior debt Commercial paper 0 - 1 year 59 132 Euro MTN 1 - 2 years 398 628 Domestic MTN 0 - 1 year 350 350 Loan to AMP Bank 0 - 1 year (200) (200) 607 910 TOTAL RESOURCES 3,932 3,895 Surplus above MRR increased by A$240m to A$1,482m at the Group level FY10 FY09 Gearing 10% 13% Interest cover (underlying) 11.6 times 11.9 times Group cash A$468m A$622m Undrawn bank facilities A$500m A$700m 28 886 823 829 1,023 1,089 668 895 898 1,242 1,482

500

1,000 1,500 2,000 2,500 3,000 FY 06 FY 07 FY 08 FY 09 FY 10 MRR Surplus 1.8 2.1 2.1 2.2 2.4

Financial overview – strengthened capital position over five years

A$m Coverage (times) FY 06 adjusted for 40 cents per share capital return paid in 1H 07.

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29

Financial overview – capital movements

1,242 1,548 1,482 775 (387) (18) (64) (66) 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200

Reg. capital above MRR at FY 09

Net profit attributable to shareholders of AMP Limited Dividends (net of DRP) Intangibles/DBF deficit Other movement in regulatory capital resources

Reg. capital above MRR before movement in MRR

Movement in MRR

Reg. capital above MRR at FY 10

A$m Movements in MRR (A$m) Markets 92 Asset mix (59) Par smoothing (35) Risk new business 90 Other (22) Net increase in MRR 66

Reg. capital above

MRR at FY09 Net profit attributable to shareholders of AMP Limited Dividends (net of DRP) Intangibles/DBF deficit Other movement in regulatory capital resources

Reg. capital above

MRR before movement in MRR Movement in MRR

Reg. capital above

MRR at FY 10 30

Financial overview – regulatory capital outlook

Strengthened capital position ahead of outcomes of regulatory capital

reviews

Reviews underway include
APRA developing supervision framework for conglomerate groups (to include

conglomerate capital standards) and reviewing capital standards for life and general insurers

ASIC reviewing financial requirements imposed on responsible entities of

registered managed investment schemes under the AFSL regime

Reserve Bank of New Zealand reviewing solvency standards for NZ insurance

companies

Basel Committee on Banking Supervision reviewing global banking

supervision (Basel III); APRA will then revise Australian banking standards

Reviews at various stages of development and consultation
Too early to determine impact of changes on AMP’s regulatory capital

position

AMP prudently holding more capital until position becomes clearer

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31

Financial overview – capital and dividends

Final 15 cps dividend represents 83% of 2H 10 underlying profit Dividend payout ratio Franking DRP 75% to 85% of underlying profit Policy FY 10 Maximum possible Dividend 60% franked Preference for DRP at par, with shares bought

n market

DRP offered at a discount of 1.5% and effected by issuing new shares, as part

f prudent capital

approach

Following the proposed merger between AMP and AXA APH’s Australian and New

Zealand operations, the franking capacity of the merged company is expected to be less than AMP’s current FY 10 franking level of 60% in the near term, given AXA APH’s current franking position

32

Outlook & strategy

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33

Outlook

In short term, the global recovery looking increasingly robust,

particularly in the US, although volatility from GFC aftershocks still likely

Australian growth will be distorted by the floods and Cyclone Yasi in

the short term, but the medium term outlook remains bright

AMP well positioned for regulatory changes in industry and

prudential requirements

Integration planning underway for proposed merger with AXA
Over medium term, dynamics underpinning wealth management in

Australia and investment management in Asia remain highly attractive

Proposed move to 12% SG in Australia over next decade will

underpin strong market growth

AMP’s growth investments, including selective M&A, are positioning

the business to succeed in changing wealth management world

34

Short-term outlook – cost outcomes

Tight management of costs across the business will

continue

AFS costs expected to grow by 4-5% in FY 11 as

investment in growth initiatives continues

AMPCI cost ratio expected to remain above medium-term

target in 2011 as a result of continued investment in Asian expansion and final tranche of investment in new operating platform; FY 11 cost to income ratio should be in line with FY 10

Integration cost budget of A$285m (post tax) for AXA

merger, with expected net annual synergies of A$120m (post tax)

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35

Growth strategy: reshaping the business for success

Ongoing investment program across five growth platforms has

enabled fast, flexible responses to changing regulatory and consumer environment

1. Growing planner capacity and broadening distribution 2. Expanding to Asia through AMP Capital Investors 3. Growing customers in high-value segments 4. Reshaping AMP Capital Investors into a high value-add investment manager 5. Investing in key growth enablers

Investment has enabled AMP to renovate core business,

expand into new markets and geographies and reshape the business portfolio through targeted M&A

While emphasis has been on renovating core, now gaining

traction in new markets / geographies and targeted M&A

36

Organic growth strategy gaining traction

Goal Action Outcome

Professional, productive planner force growing faster than the market Quality products that respond to the needs of fast- growing customer segments More of AMPCI’s net cashflows sourced internationally

Removed in-built commissions and moved to

fee-for-advice on new super, investment and pension products from 1 July 2010

Increased investment in Horizons Planner

Academy

Invested in COIN planner software and

paraplanning services

Roll-out of scoped advice pilot
First financial planning centre opened
AMP Flexible Super launched in May; catering

for broad range of customers; choice of investment options and product features; pricing to match

Improving HNW position with:
Personalised Portfolio aimed at SMSF market
AMP Private Wealth Management, employed-

planner channel for HNW clients

Revamped risk offering - with product and

service improvements including claims and underwriting concierge services

AMPFP largest planner group by adviser numbers; growing

faster than industry1

AFS planners more productive than industry average2
Horizons graduates helping to drive AMPFP planner force

growth; 297 graduates to date, including 81 in 2010

COIN delivering up to 60% efficiency gains
Paraplanning volumes up 68% on FY 09
Scoped advice packages now used by 200 planners
Success of pilot means more financial planning centres to
pen in 2011

1. Money Management, August 2010. 2. Comparator 2010 Annual Quantitative Report – investment and insurance sales per advisor.

AMP Flexible Super AUM A$1.4b at 31 Dec; average 150

new accounts opened each day

Flexible Super awarded 5-star Canstar Cannex rating and

the Heron Partnership 5-star rating

SuperRatings named Flexible Lifetime – Super Easy (now

Flexible Super Core) 2010 Best New Product

Personalised Portfolio AUM A$263m at 31 Dec
Individual risk API increased by 9% and sales through IFAs

increased by 30%

A growing number of investment professionals in

a number of geographic centres, including Hong Kong, Singapore and Japan

Improved distribution capability in Japan (Gemini

acquisition)

Marketing two closed end infrastructure funds

globally

Brookfield JV in listed infrastructure / property
Strengthened capabilities in international centres
8% of AUM now sourced from Asia
A$1.7b raised from international clients
A$7b in AUM managed for Japanese clients
Secured first UK, Japanese & French pension fund investors

in infrastructure

Launched Global Listed Infrastructure Fund with Brookfield
Launched Infrastructure Debt Fund, with client commitments
f €118m at first close, including a large Asian investor

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37

AXA merger to accelerate growth strategy

AMP’s proposed merger with AXA will accelerate delivery of our

strategy, capture synergies and position the merged business for stronger growth

The merger will create:
the leading independent wealth management company in Australia and

New Zealand

significant scale in Australian and New Zealand markets, strengthening

the company’s competitive position and balancing a market-leading position in personal and corporate superannuation with a strong position in retail risk insurance

a broader and deeper distribution footprint, providing multi-brand advice
ptions and improving distribution through IFAs
a stronger domestic base to support AMPCI growth into Asia
The combined company will be a competitive new force for consumers

and a wealth management company differentiated through its commitment to the value of financial advice and the role of financial advisers

38

Approach to AXA / AMP integration planning

Objectives of the integration include
building on strengths of both organisations to create stronger merged business
ensuring stability of core businesses
retaining key talent
delivering planned synergies and benefits
minimising customer and planner disruption and attrition
building long-term, accelerated growth profile of combined business
managing risk effectively
Process includes
integration planning being done alongside core business to minimise disruption
initial integration workstreams formed, with increasing input from AXA as we

progress to completion

Current indicative timeline
Approvals being sought from

regulators and Government

2 March – AXA shareholders

vote on scheme of arrangement

7 March – second court date
8 March – scheme would

become legally binding

22 March – end of VWAP

period

30 March – AMP would merge

with AXA APH

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39

Summary

Growth investments are delivering a more flexible,

responsive business, well ahead of regulatory change curve, with:

a reinvigorated product set
repositioned advice business and transformed, growing

planner force

broader and deeper distribution footprint
strengthened domestic and international investment

capabilities

Potential AXA merger will accelerate growth strategy and

strengthen competitive position of combined company

AMP is strongly positioned in very attractive, high growth

markets and well placed to benefit from market recovery

40

Appendices

SLIDE 22

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41

Further information

Topic

Chart

Volatility in 10-year bond yield and ASX 200

42

Margin guidance

43

AMP Bank
Business and funding model

44

Business profile

45

Regulatory update

46

42 3000 3500 4000 4500 5000 5500 6000 6500 7000 7500 3 3.5 4 4.5 5 5.5 6 6.5 7 1-Jan-07 1-Jan-08 1-Jan-09 1-Jan-10 Index Percent 10-year bond yield LHS ASX 200 Index RHS

Volatility in 10-year bond yield and ASX 200

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43 43

Margin guidance

Investment-related revenue to AUM will decrease by around 3% pa

across the cycle (i.e. initially 5 to 6 bps) in normal markets

This allows for changes in business mix, increases in revenue from

member fees and fee rebates as customer balances increase

Guidance doesn’t take potential MySuper changes into account –

however AMP remains confident margin compression can be managed

CWM has around A$9b of default superannuation business in accounts

receiving SG contributions on which planners earn commissions – representing 17% of total CWM business

Removal of commissions does not impact CWM net revenue margins
MySuper-type pricing likely to involve a range below 1%
Design changes and supply chain management can reduce product costs
Govt intends to look at transitioning arrangements, grandfathering provisions
MySuper and proposed shift to 12% SGC offer potential for revenue

growth

1. Includes 1% pa assumption of switching from existing AMP products to AMP Flexible Super. 5% rate of switching would only increase guidance by 0.3% pa. 44

AMP Bank – business and funding model

Direct Australian bank offering residential mortgages and deposits
Direct and third-party distribution, including AMPFP and mortgage brokers
Operating earnings of A$42m in FY 10 (FY 09 A$35m)
Capital adequacy ratio of 11.33% at December 2010; tier one $264m (FY 09 $248m)
A$10.1b mortgage book (56% mortgage insured*); 1% market share of residential

lending

Less than 3% of mortgages are classified as low doc and are 100% mortgage-insured*
Weighted average LVR for the total mortgage portfolio is 57%
Loans with LVR >80% at origination are mortgage-insured*
90+ day arrears at 0.43% FY 10 (FY 09 0.30%)
Historical bad debt experience totals A$5.2m over past 5 years
Doubtful debt provision of A$1.0m and specific provision of A$1.6m at December 2010
A$7.5b in on balance sheet funding at December 2010
39% retail deposits, 25% superannuation deposits and 36% wholesale deposits
A$3.3b in off-balance sheet funding at December 2010
Net interest margin 1.38% (FY 09 1.40%)
Cost to income ratio 41.1% (FY 09 47.5%)
NTA $300m at 31 December 2010 (FY 09 $258m)

* Mortgage insurance provided by external supplier.

SLIDE 24

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45 8% 7% 2% 9% 13% 20% 41% Cash Management Business Saver Investment Accounts Transaction Accounts Savings Accounts Term Deposits Super Deposits 5% 15% 1% 9% 12% 19% 40% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 90+ days past due

AMP Bank – business profile

Deposit mix (excluding wholesale) Credit quality

0.50%

0.00% 0.50% 1.00% 1.50% 2.00% Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10

4.00%
2.00%

0.00% 2.00% 4.00% 6.00% 8.00% 10.00% Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 2009 2010

Mortgage growth relative to market Deposit growth relative to market

AMP Bank Total Market AMP Bank Total Market 46

AMP changing well ahead of curve

Future of Financial Advice (FoFA) reforms

Draft legislation expected mid-2011; reforms to

commence July 2012. Proposals include:

Prospective ban on super, pension and

investment product commissions

Adviser charging regime
Fiduciary duty for financial planners to act in

best interests of clients AMP participating in consultation process Removed built-in commissions on super, pension and investment new business from 1 July 2010 Broadly support establishment of fiduciary duty for financial planners Stronger Super

Stronger Super (Government response to Cooper

Review) released Dec 2010; direction of regulatory change becoming clearer

MySuper can be offered from 1 July 2013 with

transition arrangements for existing default products

Simple, low cost default super product
Product requirements to be set in legislation;

enforced by APRA

MySuper funds to be only eligible default funds

in modern awards

Productivity Commission review of award

default funds to be completed by 1 July 2013

SuperStream: to modernise and streamline

superannuation administration; most measures in place by 1 July 2015 Significant consultation with Treasury already undertaken Already launched AMP Flexible Super – a simple, flexible, all-in-one super and retirement solution expected largely to meet Government’s MySuper product attributes Potential for closed segment of super market to be

pened to competition

AMP’s efficiency already recognised as industry-leading; changes likely to lead to further efficiency opportunities for AMP

AMP action/impact Proposed reform