AMP posts $252m loss as suitors circle AMP Capital, which has been renamed Collimate Capital

The embattled financial services group confirms it has received ‘inbound enquiries’ on AMP Capital, which has been renamed Collimate Capital ahead of its sale.

AMP has posted a $252m loss for 2021 as suitors cirlce AMP Capital. Picture: Hollie Adams/The Australian

AMP chief executive Alexis George says she is focused on getting the demerger of AMP Capital, now renamed Collimate Capital, over the line even as suitors look to court the business but has kept the door open for a potential sale, declaring the wealth manager will consider “any valid offers” that come its way.

Her comments come as ASX-listed AMP reported its full-year result for 2021, swinging to a $252m statutory loss as a result of impairment charges, transformation costs and remediation expenses.

AMP shares surged 4 per cent to $1.05 as investors looked through the statutory numbers to focus on the underlying result, which showed full-year net profit jumped 53 per cent to $356m, as well as the prospect of a tussle for Collimate.

Ms George, who has been in the top job at AMP for six months, also cautioned on the property market outlook as AMP Bank looks to steal market share from its peers, warning that she expects the Reserve Bank could lift rates as soon as June, with the property market likely to slow as a result. But she also sees the economy proving its resilience in the face of the near-term headwinds.

“While our house view has been for a rate increase in August, this could come as soon as June or July.

“We don‘t expect these increases to impact the economic recovery but we do expect a slowdown in the property market and there could still be some share market volatility over the near term. These conditions are front of mind for us as we look ahead over the next 12 to 24 months,” she said.

On the prospect of a shift from a demerger to a sale of Collimate, Ms Alexis said she wasn’t surprised to be “getting offers from various parties” but was still working to a demerger as the end goal.

“We continue on that demerger road but, of course, we‘ve got a fiduciary obligation to consider offers,” Ms George told The Australian.

“So we’re going to just push on with the demerger and if any offers come in that would warrant consideration we will absolutely do that.”

The update comes after The Australian’s DataRoom column on Wednesday revealed three parties are believed to be carrying out due diligence on AMP Capital/Collimate.

If Collimate is spun-off and listed on the ASX as planned, Ms George reaffirmed AMP will look to retain “up to 20 per cent” of the business to boost the balance sheet and financial flexibility of the wealth manager.

Handing down the full-year result, Ms George said the underlying annual net profit of $356m showed the strength of the bank and the cost savings achieved across the business.

“We have set a clear strategy to drive two simpler and more efficient businesses, well placed to compete, grow and deliver value in a highly dynamic market,” Ms George said.

“We’ve achieved a solid underlying profit result, which shows the strength of our bank, growth of the North platform with increased inflows from external financial advisers, and the significant cost savings achieved from across the business, in line with our targets.”

On an underlying basis, full-year net profit jumped 53 per cent, driven by AMP Bank’s earnings and the release of provisions, as well as AMP Capital performance fees in the second half from closed-end infrastructure funds.

AMP Bank’s profit surged 38 per cent to $153m, as the residential mortgage book grew at 1.36 times system over the year, accelerating to 2.1 times system in the fourth quarter, but its net interest margin was compressed toward the end of the year and will continue to face pressure in the near term, Ms George said.

“I’m still comfortable with where we’re playing in the NIM space, because we still have a very small market share, but I’m not going to be silly about it. I think there’s a point when we’ll have to be very mindful, but we’re not at that yet. So I want to continue to grow that book and just watch the NIM compression moving forward.”

Australian Wealth Management total assets under management increased 8 per cent to $134bn, driven by improved investment markets and a reduction in net cash outflows.

Ms Goerge said the wealth manager was “at the bottom of the cycle” and after cutting prices was now “very competitive” in the market as it rebuilds its reputation.

No final dividend will be paid, AMP confirmed, as it looks to retain a conservative stance in the run-up to the demerger.

Barrenjoey analysts said the full-year result beat expectations, with the $356m underlying profit 14 per cent above consensus and its own expectations.

“At a high level the beat was driven largely by higher performance and transaction fees, with outflows and margins largely in line.”

Turning back to the demerger, Ms George said it was on track to complete in the coming months.

“Significant progress has been made … and we’re on track for completion in the first half of this year.”

Collimate CEO Shawn Johnson said the new name was “an exciting step” in the journey to establish the brand.

“Today’s announcement is a strong symbol of our ongoing progress towards demerger. The new brand matches our determination to work in parallel alignment with our clients, partners and communities to develop and deliver long-term, sustainable assets and returns.

“As a demerged entity, Collimate Capital will provide a greater level of independence, stability and accountability to further enable the delivery of superior results for all of our investors and act on growth opportunities to raise equity and deploy new capital.”

Sources this week told The Australian that three suitors had quietly been given access to a data room by AMP ahead of plans for the demerger of the AMP Capital unit.

It is understood that at least one is US-based and one out of Asia has been building a stake in AMP.

Ms George said it was not unusual to be fielding enquiries on the business as it looks to demerge.

“AMP will consider any approaches in line with its obligation to act in the best interests of shareholders,” she said.