AMP residential loans hit $23.8bn

The banking arm of the group, AMP Bank, saw its residential loan book increase by $2 billion (9 per cent) to $23.8 billion in the year.

This was driven by “competitive pricing, ongoing service improvement and targeted growth in principal and interest loans across both owner-occupied and investment lending,” it explained.

According to the lender, AMP Bank helped around 188,000 customers with their banking needs and provided over 9,290 new home loans in FY22.

The group also confirmed an improved Net Interest Margin (NIM) and “maintaining strong credit quality of the loan book.”

Overall, the resi loan book growth was 1.5x system, excluding the digital loans it had acquired via its purchase of fintech Nano.

When including the $400 million of loans acquired from Nano in December 2022, this rises to 1.8x system growth (based on December 2022 APRA data).

The quality of the mortgage book was maintained with 67 per cent of customers being owner-occupied, and an average book loan-to-value ratio (LVR) of 66 per cent, AMP highlighted.

The bank also outlined it had geographical exposure skewed towards New South Wales (45 per cent) and Victoria (23 per cent).

“The dynamic LVR weighted average for existing mortgage business increased by 5 per cent to 63 per cent in FY22, reflecting latest property values,” it explained.

Embedding a digital-first experience

The results show that the proportion of broker-originated loans reduced by 3 percentage points to 87 per cent in FY22 (90 per cent at FY21).

The drop comes as AMP increases its focus on the digital/direct channel. Indeed, it flagged that the bank intends to “grow its direct/digital channel” in the coming years by the lending platform of direct-to-consumer brand Nano.

However, it added that it would also be embedding “a digital-first experience for customers and brokers, and ongoing improvements in lending origination experience".

AMP chief financial officer Peter Frederickson described FY22 as: “A good result given the competitive landscape within which the bank continues to operate.”

He added: “This growth has been supported by strengthened digital capability, which coupled with enhancements in our service proposition has delivered a 33 per cent improvement on median ‘customer cycle time’ to unconditional approval, now at 8.3 days.”

“What is most important is that as we pursue growth, we are maintaining the high quality of our loan book,” Mr Frederickson explained.

AMP chief executive Alexis George commented: “We have made excellent progress on the delivery of the strategy that we announced in November 2021,setting us on the path to a new AMP.”

“Our strategic focus has been on simplifying our operations and repositioning AMP as a leading wealth management and banking business in Australia and New Zealand.

“We are now focused on driving growth in our core businesses and exploring new business opportunities for longer term growth,” she explained.

90+ arrears decrease despite rising rate environment

Despite the rising-rate environment since May 2022 - the start of 9 successive lifts from the Reserve Bank of Australia (RBA) – AMP data revealed that mortgage arrears over 90 days dropped.

Only 0.30 per cent of mortgages were 90+ days in arrears in FY22, down from 0.50 per cent in FY21.

There were 41 per cent of AMP Bank customers ahead of their mortgage repayments schedule by more than three months, it noted.

AMP no longer has any customers on the COVID-19 repayment pause program, and the bank said it was continuing “to work with customers in hardship to return to regular repayments”, and to “support them through a range of options, depending on their individual circumstances.”

[Related: AMP acquires Nano home loan book]