AMP AGM 2022 CEO address

Good morning and welcome to all of those who have made it to the Wesley Centre today to join us in person for our AGM, and to all of those joining us online.

I appreciate the opportunity to be able to meet and speak with shareholders face to face, particularly as it is my first AGM as CEO, a position I am proud to hold.

I too would like to acknowledge the Traditional Custodians of the Lands on which we are meeting today, the Gadigal people of the Eora nation, and the Traditional Custodians of the lands that you are all joining from. I would also like to acknowledge elders both past and present, and to extend that respect to all First Nations Peoples.

I am very pleased to be addressing you for the first time as the CEO of AMP. I took on this role because AMP is a company that I have respected and admired for many years, even though it has faced challenges in the more recent part of its 170-year history. I joined the company nine months ago and while that was in the middle of a lock-down, that has not slowed us in articulating a new strategy and purpose and executing on the promises we have made. I am very proud of what we have been able to achieve in this short space of time and I will outline some of those achievements shortly. With the recent announcement of the sale of our Collimate businesses, this is a new beginning for AMP – as a more focused, purpose-led bank and retail wealth manager in Australia and New Zealand.

Let me start by telling you a little about me. I’ve worked in the financial services industry for over thirty years, although I did start my career as a chartered accountant. I know the industry intimately, understand the importance of it for the Australian economy and community and that it is constantly undergoing change. I am also conscious of the enormous potential and responsibility that we have to make a positive impact on our customers right across Australia and New Zealand, every single day.

Since arriving at AMP, I have spoken to many of our customers, people and shareholders about the strategic challenges and opportunities that lie ahead for our business. Most want to see AMP returned to its former glory as I also do. However, we need a new AMP for today and for the future. We need an AMP that is more focused, customer centred, and embraces the new world where data and technology are critical to delivering our strategy and benefits our customers. We also need an AMP that is purpose led and where: helping people create their tomorrow is top of mind for any decision we are making.

The opportunity for AMP

My vision for AMP is to restore its standing as a trusted company, helping Australians and New Zealanders to create their tomorrow and achieve their financial goals.

We will deliver this through embracing technology and becoming digital first, being more customer-centric, braver in our decision making and transparent and open with our commitments and successes and learnings. We will be more focussed as a financial services organisation, specifically providing banking, investment solutions, financial advice and superannuation to Australian and NZ customers.

We are well positioned with a small but growing technology-enabled bank. We have a comprehensive and well-established investment platform. We also have an established network of financial advisers and, we are a major provider of superannuation in both the default and advised spaces. We also intend to be a leader in providing financial solutions for those entering retirement and we are planning to launch new offerings in the second half.

How we will deliver: Strategy

I dedicated my first three months in the role to identifying opportunities to drive better performance for our shareholders and improved outcomes for all of our stakeholders. This helped form the AMP strategy that I outlined last November – which I described as the Path to a new AMP.

The strategy has three pillars to Reposition our businesses, Simplify the operating model and Explore new opportunities for growth. Repositioning AMP is all about how we drive the best performance from our existing businesses, by focussing investment where we think we have competitive advantages and efficiency where there are margin challenges.

Simplifying AMP is about executing the sales of the Collimate businesses and reshaping our operating model to be less bureaucratic, more nimble and more appropriate for the smaller business we are about to become. Exploring is where we are looking at new customer solutions and new capabilities to complement our business, better serve customers and assist to drive growth.

To execute the strategy there are a few things we need get right. Those key enablers are being purpose-led, improving Brand and reputation, having strong Environmental, Social and Governance performance and policies, leveraging digital and data, always respecting risk and ensuring we manage our capital in an efficient manner and keep our shareholder needs always at the top of mind.

The Executive team and I are aware of the challenges and opportunities ahead and will work hard every day to execute on the promises we have made.

Reposition

Repositioning our businesses starts by knowing where the immediate growth opportunities and customer needs are. One of our strongest opportunities is in AMP bank. We have been growing our home loans at twice the pace of the banking system in the last two quarters in a very competitive environment. With rising interest rates and a more difficult economic environment, we need to ensure that this growth is responsible and not at the expense of increasing the risk profile of the business.

The Bank also has strong relationships with mortgage brokers and these relationships are supported by our focus on customer service and efficient loan turnaround times. We have consistently been ranked by brokers in the top five Australian banks for turnaround times and this will continue to remain a focus for us.

In wealth management, an area with strong potential is our Platforms business, which supports both our aligned advisers and independent advice practices. We are focussed on making our top investment management platform, North, a preferred platform for all financial advisers. While we have a network of aligned advisers, who know our systems well and use North, if we are to grow, we also need to engage independent financial advisers. We’re doing this by constantly improving the capability of the platform, expanding the investment options available and ensuring we have the right relationship management in place.

The focus for our MasterTrust or superannuation business is on stabilising earnings. We’ve simplified our investment options, improved investment performance and we need to continue to reduce the costs of running that business through further automation and simplification. Similarly in New Zealand Wealth Management our focus remains on maintaining good customer outcomes and providing stable earnings.

When it comes to our Advice business, we know how important providing financial advice for Australians is, and we remain committed to improving access. However, the current regulatory settings mean it is very difficult for a licensee to be sustainable and profitable. The business has been running at a substantial loss in recent years and is projected to do so in 2022. We are accelerating the transformation of advice by implementing a contemporary services model, embracing technology and ensuring the services provided are appropriately priced.

Simplify

Our strategy identified that we need to efficiently complete the separation of AMP Capital, or as it is known Collimate, from AMP and right size the business for the future direction of the company. We need to remove bureaucracy, become more agile, make brave decisions and learn from our mistakes. We also need to ensure that the portfolio is constantly reviewed and serving the new purpose and company direction.

Explore

The Explore stage of our strategy, encourages new thinking and new partnerships to deliver growth. A perfect example is the partnership we launched this week with financial services technology player Nano, who are going to help us to deliver one of the first truly digital mortgages into the Australian market.

Retirement is also a key area where we believe we have the in-house expertise and heritage to be a market leader in providing innovative solutions. In the coming months we will provide further details of these new retirement products that we believe will be a key differentiator for us, and an opportunity to grow new business.

We have also been transparent that we will pursue inorganic growth opportunities for both new capabilities and scale where that makes sense. I do stress that we have committed to returning to shareholders the majority of the proceeds from the recent transactions, after allowing for the re-payment of some debt.

How we will deliver: Culture

In order to deliver on the strategy we need an engaged AMP team with a clear purpose and a strong culture.

We don’t make tables and chairs, we are in financial services, and so we make promises. That means we need employees that are committed to our customers, and that commitment must be embedded in our everyday. Culture is a big focus for me personally, because I know how critical it is to our success - and that’s why I am leading from the front.

From day one at AMP, I’ve seen an organisation that is working hard to simplify and improve the efficiency of our business and to return us to growth. There’s no lack of energy or drive in our people, and you will see that in our recent achievements.

We have made significant progress in reinvigorating the culture. We rolled out inclusion training to all employees in 2021. We also reached our 40:40:20 gender diversity targets at board, middle management level and across the workforce generally, and we continued our commitment to employee led diversity groups such as AMProud.

We have improved our reporting systems and have put in place a clearer performance framework. Our employee satisfaction scores increased from 67 out of 100 in 2020 to be at 71 by the end of 2021. Staff engagement should get stronger as the focus of the business sharpens and the alignment to our purpose becomes clearer.

Our employees continue to embrace the change and participate in building the new AMP. Shaping our culture is top of mind for our people. I saw this first-hand with many employees actively participating in workshops to help us establish a new, enduring and authentic purpose and values for our organisation.

I am very proud that we have launched our new Purpose – helping people create their tomorrow. It is a good reflection of AMP’s commitment to all of our stakeholders. The next step is to embed this and have it reflected in everything that we do.

We have developed a set of values that are embraced by our people and encourage action. They are: Put customers first… Own it… Be brave… Play as one team …Do the right thing.

As we look to reinvigorate our brand, it is important that we put our customers at the centre of our decision making.

I have had experience with customer-led transformations in my previous organisations, and AMP’s NPS customer score of +27 in Australia for 2021 is a strong result. Skilled labour shortages in our contact centres have begun to weigh on these scores in more recent times… not just at AMP but in many organisations - and that is an ongoing focus for the team.

I want to thank our people for their commitment to our customers. The past 12 months have continued to challenge us and we have all had to be adaptable. We’ve helped customers affected by numerous natural disasters and of course, the COVID pandemic. It has been an uncertain time for many and we can, and will continue, to play an important role in helping our customers as life returns to a new normal.

Achievements

In my first nine months I have taken a number of actions to set AMP up for the future.

As I just outlined, those important steps have been:

• Establishing the AMP strategy for our post-separation business
• Launching our new AMP Purpose and Values
• Instilling a sense of urgency around execution, and last but not least
• Executing the sales of our Collimate businesses which will result in earlier return of value for our shareholders

Together with the sale of the Infrastructure debt business in February for $578 million, this values the Collimate businesses at over $2 billion.

As well as those three sales, since starting in the role 9 months ago we have also:

• Sold the Global Equities and Fixed income business realising approximately $63 million in cash
• Completed the transfer of the Multi-Asset group – out of AMP Capital – and into Australian Wealth Management to create an end-to-end superannuation and investments business.
• Initiating the exit from life insurance with the sale of our remaining 19% stake to Resolution Life.

It has been a very busy start to my time at AMP, but it is of course only just the beginning of what we intend to achieve.

2021 Financial Performance

Our business performance for 2021, reflects that we are a business in transition. While we recorded a statutory net loss of $252 million, the underlying business showed a solid performance with a net profit after tax of $356 million - up 53 per cent on the previous year.

AMP bank’s net profit increased 38 per cent to $153 million, driven partly by the mortgage book growth I talked about earlier.

Australian Wealth Management profit was down 25 per cent to $48 million as we repositioned the portfolio to be competitive both from a price and proposition perspective. $200 million in earnings across our superannuation and platforms businesses was offset by the losses in the Advice business which we do need to address. As I mentioned, a big focus will be on continuing to drive Platforms revenue and making our Advice business much more efficient. A number of savings in Advice have already been achieved which will flow through in this year’s results.

New Zealand Wealth Management profit was up 11 per cent to $39 million.

We are on track with reducing costs across the business, and in line to meet our promised $300 million savings target in financial year 2022.

Today we are not in a position to resume the payment of dividends to our shareholders. However, we treat the management of shareholder capital seriously, and will be returning the majority of proceeds from the recent sales of the Collimate businesses to shareholders, allowing for the paydown of some debt, through both share buybacks and capital return. At the conclusion of these activities the dividend policy will be reviewed. However, as we are heading into more uncertain times, I want to ensure we have a robust capital management approach and a strong balance sheet.

I am committed to continuing to improve our business profitability and sustainability in the coming years, but we still have much work to do.

Our Purpose and community work

I would like to finish, by sharing some of the work we do in support of the community. This is at the heart of our Purpose of Helping people create their tomorrow.

Through the AMP Foundation we support many people doing amazing things in the communities where we operate.

This year I have joined the Foundation Board along with my fellow AMP Limited Board member Andrea Slattery.

Over the last 30 years, the Foundation has contributed through social investment, direct donations, employee dollar matching, employee fundraising and volunteering.

Through our Tomorrow Makers program, the Foundation supports a range of social enterprises including Need a Tutor, which helps indigenous students with access to online tutoring in remote communities. We have also supported the Centre for Women’s Economic Safety, which gives support services to women facing financial abuse.

The Foundation’s work doesn’t always get the recognition that it deserves, but that does not matter to those people in need, who benefit from it.

AMP has also made significant progress in our Reconciliation Action Plan (RAP), having delivered more than 60% of our commitments since its launch in 2020. It’s important that we have a strong relationship with our First Nations communities and support Reconciliation more broadly in the Australian community.

Conclusion

Thank you again for joining us today, I am pleased to see many of you here in person.

I am confident that AMP’s strategy sets us up for success. We have taken a big step forward in separating the businesses, and executing the Collimate sales. We are able to think about capital management actions to provide value to our shareholders and strengthen the balance sheet through the paydown of debt. I am proud to be leading AMP through to its next phase and I am confident that the changes we have made, and the priorities we have identified, will position us for a strong and sustainable future. I remain committed to working tirelessly to return value to all of our stakeholders and especially our shareholders.

I’ll now hand back to Debra.