AMP delivers solid mortgage growth, increases margin

The lender’s total loan book was valued at $15.1 billion at 30 June this year.

In a trading update yesterday, AMP noted that lending growth remains slightly above system with new retail mortgage business from advisers stable at 24 per cent.

The bank managed to increase its net interest margin by 18 bps from 1.35 to 1.53 due to targeted pricing initiatives, tight liquidity management and lower wholesale funding costs.

AMP’s mortgage book grew from 13.5 billion to $14.6 billion in the six months to 30 June.

Owner occupied loans made up 68 per cent of the mortgage portfolio at 30 June 2015, while investment property loans were 32 per cent.

The lender has implemented a number of measures designed to comply with regulatory requirements to reinforce sound lending practices, including increased supervision of risk profiles, investment lending and serviceability of residential mortgages, the bank said in an ASX statement yesterday.

“These measures include changes to credit policies relating to, and the availability and pricing of, AMP Bank investment lending products,” it said. “This is expected to slow the growth of AMP Bank investment loans in 2H 15 and into 2016.”

AMP Bank’s asset quality remains strong, with mortgages in arrears (90+ days) at 0.44 per cent as at 1H 15.

In order to comply with the Basel III liquidity requirements, which came into effect on 1 January 2015, AMP Bank has diversified its liquidity portfolio, including adequate high quality liquid assets (HQLA). As at 30 June 2015, the bank’s liquidity coverage ratio (LCR) was 145 per cent.

The Capital Adequacy Ratio (CAR) was 12.2 per cent as at 1H 15, up from 12 per cent at 1H 14.

However, AMP Bank’s Common Equity Tier 1 (CET1) capital ratio for 1H 15 was 7.7 per cent, down from 9.0 per cent at 1H 14.

“This reduction is the result of a capital return to the group of $100m of common equity, following the on-lend of Additional Tier 1 capital from the AMP Wholesale Capital Notes issued in March 2015,” the group said.

“Both ratios remain well above APRA thresholds,” it said.

“AMP Bank is well placed to be compliant with Basel III capital requirements upon implementation in January 2016.”