Ameriprise Financial(AMP) - 2025 H1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Group NPAT increased over 9% to $131 million, driven by cash flows in wealth businesses and efficiency improvements despite over 3% inflation [3][12] - Total revenue rose to $632 million, with controllable costs decreasing by over 4% to $300 million, resulting in a 14% EBIT improvement [12][28] - EPS improved by 18%, positively impacted by operating performance and share buybacks, with a cost-to-income ratio improving almost 3% to 59.4% [3][12] Business Line Data and Key Metrics Changes - Platforms NPAT increased to $58 million, up 7.4% due to significant AUM growth, with AUM up over 11% to $83.2 billion [14][16] - Superannuation and Investments NPAT remained flat at $34 million, with AUM growing over 8% to $58.5 billion [15][19] - AMP Bank NPAT improved to $36 million, reflecting careful management of volume and margin, with NIM growing by 2 basis points [21][22] Market Data and Key Metrics Changes - New Zealand NPAT increased almost 12% to $19 million, supported by diversified revenue streams despite a challenging economic environment [24][25] - AUM in New Zealand rose by 9.6% to $12.2 billion, driven by market movements [14][25] - Partnerships in China delivered strong results, with NPAT up 35% to $27 million, while other partnerships saw a decline due to property valuations [26][27] Company Strategy and Development Direction - The company aims to drive improvement in wealth flows, innovate in retirement, and utilize AI for advisor efficiency [33] - Focus on scaling AMP Bank Go while seeking niche lending opportunities to enhance margins [33] - Continued support for partnerships and potential exit from the PCCP relationship in the future [34] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the growth in China partnerships, expecting a 10% growth through the cycle despite economic challenges [39][40] - The company is cautious about maintaining NIM due to competitive pressures in the banking sector [42][44] - Management emphasizes the importance of cost discipline and plans to maintain controllable costs while investing in growth [87][89] Other Important Information - The interim dividend announced is $0.02 per share, franked at 20% [3] - The business simplification program is expected to conclude slightly later than anticipated but remains within the guided investment envelope of $150 million pretax [31][32] Q&A Session Summary Question: Earnings growth outlook for China partnerships - Management expects continued strong growth in the China partnerships, supported by government pension reforms and a favorable macro backdrop, with a target of 10% growth through the cycle [39][40] Question: NIM expectations for the second half - Management maintains a cautious outlook for NIM, citing competitive pressures and a decline in deposit volumes, which may affect future performance [41][44] Question: Margin dynamics in Superannuation and Investments - Management indicates that margin compression is primarily due to AUM growth and fee caps, with a focus on improving the customer mix to enhance margins [46][54] Question: Capital management and future outlook - Management acknowledges uncertainties but remains optimistic about capital position, emphasizing the need to balance between holding capital and investing for growth [49][50] Question: Controllable costs and inflationary pressures - Management is committed to meeting controllable cost guidelines while acknowledging that inflationary pressures will impact future costs [56][89]