AMP mortgage book up by 18% to $18.2bn

According to the results for the six months to 30 June 2017, the residential mortgage book of AMP Bank now sits at $18.2 billion, up by almost 18 per cent on the same period last year (from $15.4 billion) and 10 per cent up on the prior six-month period. 

The increase has been largely attributed to a rise in sales through the broker channel, where sales were up by 50 per cent, as well as AMP’s aligned adviser channel, where sales were up by 49 per cent on the prior comparative year. 

According to the bank, the boost has been a result of its focus on the broker and adviser channel.

The bank reiterated that its priority was to build a “superior advice and broker support network and proposition”.

AMP chief executive Craig Meller commented: “We've been increasing our footprint and the greatest focus has been within AMP's own adviser network where the growth in new business in that network is up [by] over 40 per cent year-on-year. 

“We are very pleased with the progress that we've made in broadening the number of advisers that are now distributing AMP Bank mortgages.” 

When asked by The Adviser about its broker remuneration strategy, Mr Meller said: “We're not expecting any change in the short term. 

“As the industry evolves, we'd expect to play a full part in that evolution, in the same way that we have done with adviser remuneration in the more traditional parts of our business.” 

Overall, the bank reported that residential mortgage competition, particularly in the owner-occupied market, remained “intense”, but it was pleased that the bank had delivered 18 per cent book growth. 

It noted that the growth in AMP’s investment property and interest-only lending segments was constrained, in response to “regulatory requirements”, and most probably as an effect of its pull-back on investor refinances earlier this year and repricing of investor loans. 

It added that it has maintained a “conservative” credit policy. 

Commenting on the bank’s results for the half, Mr Meller said: “It's been another very strong half, with operating earnings up [by] 10 per cent. The loan book grew by 17 per cent year-on-year, well above market, driven by residential mortgages, particularly owner-occupied.

"We saw a strong increase in mortgages being sold through our aligned adviser force. The market remains competitive with increasing regulatory requirements, particularly on investor and interest-only mortgages. For this reason, we expect to see some moderation in the lending market in the second half of the year, as the industry adjusts to new regulatory settings."

Mr Meller concluded: “We're pretty happy with the bank's performance in the first half, and we're confident that we'll deliver the growth this year to meet our strategic ambitions for the business.”

AMP’s operating earnings were up by 10 per cent to $65 million; net interest margin declined 4 basis points from 1H16 but improved 4 basis points on the second half of the last calendar year. 

Underlying profit for the group rose to $533 million in 1H17, up 4 by per cent on the prior comparative period, but net profit dropped from $523 million in the first half of last year to $445 million in the first six months of this year.

The cost-to-income ratio rose slightly to 29 per cent, with controllable costs increasing by $4 million reflecting “ongoing investment to support growth”. 

The interim dividend has been increased to 14.5 cents per share, franked at 90 per cent. The 1H17 dividend payout is within AMP’s stated target range of 70 per cent to 90 per cent of underlying profit.

[Related: Bank’s mortgage book grows 5% in three months]