AMP reveals increase in broker flow for FY23

On Wednesday (14 February), financial services group AMP released its financial results for the full-year ending 31 December 2023 (FY23) and revealed that broker-originated residential loans had risen substantially over the year.

According to the results for AMP Bank, broker-originated loans made up 94 per cent of its residential book in 2023, up from 87 per cent in 2022.

AMP revealed that total loans equated to $24.4 billion in 2023, of which $24.1 billion came from residential mortgages and $244 million from business finance loans. This was an increase from the $24.03 billion in 2022.

Welcoming the uptick in broker flows, Paul Herbert, the head of intermediary distribution and finance at AMP, told Mortgage Business’s sister brand, The Adviser: “We’ve been focused on deepening our key relationships with brokers, supported by simplification of policy and process and through our broker experience team.

“We have delivered this through targeted broker training, a clear value proposition aligned to our policies, procedures, and pricing, and ensuring a consistent service experience.

“Pleasingly, we’ve seen broker satisfaction rates increase from 69 per cent to 84 per cent over the year, and we want to see this continue to improve as we focus on enhancing their experience with AMP Bank.”

Arrears remain low

Mortgages that were 30-plus day in arrears rose from 0.8 per cent to 1.29 per cent over the financial year. This was accompanied by a rise of mortgages in 90-plus day arrears, rising from 0.3 per cent to 0.62 per cent, more than doubling.

However, AMP stated that mortgages in 90-plus day arrears remained relatively low despite the rise, comparing it to the industry average of 0.7 per cent.

AMP said it was “actively managing provisions” for those in arrears, assisting borrowers in financial hardship.

AMP margins affecting loan book

AMP’s net interest margin (NIM) was 1.27 per cent margin in 2023, decreasing from 1.36 in 2022. AMP is expecting the NIM to be between 1.1 and 1.15 per cent at the end of 2024.

AMP Bank said it had actively focused on lowering the residential loan book in 2023 (given the decrease in NIM) subsequently leading to a “subdued growth” of the residential mortgage book of only 1.7 per cent over 2023.

“To improve return on capital, AMP Bank’s strategic focus is on disciplined responses including nominal loan growth, diversifying and optimising funding and reducing costs,” according to the group.

It recently unveiled plans to launch a new digital bank with a focus on small businesses and sole traders. With the new division set to launch in Q1 of 2025, AMP’s business loans may see an increase as the digital bank gains footing.

AMP’s new digital bank will “open a new revenue stream and diversify AMP Bank’s funding mix”, AMP commented.

Speaking of the results overall, AMP executive Alexis George stated: “With AMP now in a stronger position, we have a clear strategy focused on three areas.

“The first is to drive the profitability of our businesses, AMP Bank, Master Trust, Advice, Platforms and New Zealand. The simplification program and investment we’ve undertaken across the portfolio is delivering positive outcomes for our customers and provides a foundation for sustainable growth.

“The second is efficient cost and capital management, including delivering on our commitment to further simplify and right size our cost base, and diversifying our funding mix in AMP Bank. We have a strong balance sheet and remain focused on optimising capital – including returning surplus capital to shareholders where possible.

“The third is to build on our capabilities across the wealth value chain and large customer base to create new sources of revenue and lasting points of differentiation with customers. This includes building our digital capabilities and developing new products and services to address the unmet needs of Australia’s growing retiree population.”

[Related: AMP unveils plans to launch a new digital bank]