Bank reports $129m drop in loan book

In its third-quarter (Q3) cash flow update, AMP Bank has reported a $129 million quarter-on-quarter decline in its loan book to $20.1 billion, compared to a $400 million quarterly increase in Q3 of 2017.

According to the bank, the decline reflected the “slowdown in credit growth, a period of conservative liquidity management and increased flows to the non-bank sector”.

However, despite the reduction in its loan book, AMP reported that its deposit book increased by $773 million in Q3 2018 to $13.5 billion.

AMP sells wealth business for $3.45 billion

AMP has also announced the completion of its portfolio review, which included an agreement to divest its Australian and New Zealand wealth protection and mature businesses (AMP Life) and reinsure New Zealand retail wealth protection for total proceeds of $3.45 billion.

The outcomes of the portfolio review are as follows:

• AMP will exit its Australian and New Zealand wealth protection and mature businesses via a sale to Resolution Life for total cash and non-cash consideration of $3.3 billion. The transaction is expected to complete in 2H 2019, subject to regulatory approvals.
• Binding agreement with Swiss Re to reinsure New Zealand retail wealth protection, releasing additional capital of up to $150 million to AMP prior to completion of sale, subject to regulatory approvals.
• Intention to seek divestment of New Zealand wealth management and advice businesses via initial public offering (IPO) in 2019, subject to market conditions and regulatory approvals, unlocking further value.
• Significant capital release will strengthen AMP’s balance sheet and provide strategic flexibility; all options for use of proceeds to be evaluated and update to be provided following transaction completion.

Following the announcement, AMP acting CEO Mike Wilkins said: “The completion of our portfolio review marks a major step forward in reshaping AMP as a simpler, more focused group that is well positioned to compete in our core markets.

“Delivering the right outcome for customers, shareholders and employees has been our focus throughout the portfolio review.”

He continued: “For customers, there will be no change to their existing insurance policy terms or conditions. They will benefit from Resolution Life’s deep expertise in managing in-force insurance policies and its commitment to customer service.

“For shareholders, the agreement with Resolution Life and our exit from wealth protection and mature [businesses] delivers important strategic benefits. It substantially simplifies our portfolio, delivers certainty and frees up capital.”

[Related: Bank CEO calls for ‘clarity’ over expense validation]