Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
Shareholders punish AMP for halving the final dividend
Shareholders can be a grumpy lot. While AMP chief executive officer Alexis George (pictured) would not have been naïve enough to believe cutting the final dividend in half to one cent a share (20 per cent franked) would have gone unpunished by the market, the size of the sell-off would have surprised.
After painstakingly spending the latter half of 2024 crawling its way up from $1.04 (June 17) to peak at $1.79 on January 31, 2025 – a 72 per cent gain – AMP lost a healthy slice of that increase in the wake of the payout announcement, closing on Tuesday at $1.38.
While the company commented that its goal was a return to two cents a share for the interim and final dividends in 2025, there were no guarantees on that score – rebuilding the business would take priority over capital returns to investors – and the reassurance did not help investor sentiment.
Not even the completion of a $1.1 billion capital return program since August 2022 (including $244 million in the past year), signalling a stronger position for investors following years of strategic restructuring, appeased them.
On the plus side, AMP reported a 15.1 per cent year-on-year increase in underlying net profit after tax (NPAT) to $236 million. That was the glass-half-full version.
In the glass-half-empty version – the version for which investors were opting – statutory NPAT was down 43 per cent in 2023, to $150 million. It should be added that the 2023 statutory NPAT was inflated by the sales of AMP Capital and SuperConcepts.
George put the best possible spin on the result, telling shareholders that 2024 was another year of strategic delivery, building positive performance momentum and focusing firmly on growth.
“We sold and transitioned the advice business, hit cost targets and completed our $1.1 billion capital return program. Our wealth businesses are competing strongly in their chosen markets, driving positive performance and we’re launching new offers including digital advice,” the CEO said.
“In our North platform there has been continued adviser takeup of our retirement products and managed portfolios that are driving inflows. In superannuation and investments, our member proposition, including top-quartile investment returns for the year, are supporting the continued improvement in cashflows.”
On the banking front, she said the trends improved in the second half, including a return to growth in the mortgage book.
AMP is pinning its hopes on its recently launched digital bank to be a new potential value stream for shareholders. With 11,600 early sign-ups secured before launch, the digital banking initiative aims to improve the revenue mix and reduce funding costs, potentially leading to stronger returns for investors.
It will target sole traders and small businesses with one to 20 employees, offering transaction and savings accounts, designed to provide tailored functionality and features to help small business owners manage their finances ‘on-the-go’ from their mobile phones.
George was happy to talk-up the digital bank, saying it was an important way to start to address the funding and revenue mix. None of which could hide the fact AMP Bank’s underlying NPAT was down 23 per cent to $72 million.
The company’s strategic pivot towards retirement services and digital banking does give shareholders a strategic roadmap. “AMP is positioned to drive growth and build on opportunities in our wealth businesses to become a pre-eminent retirement specialist, as well as a leading digital bank,” George said, outlining a path to future shareholder returns – and, hopefully, improved dividends.
