AMP prioritises turnarounds in battle for mortgage growth

The primary focus from both her and chair Debra Hazelton in their addresses to shareholders was the growth and increased competitiveness of its retail banking and wealth businesses, as the remains of its asset management arm have been sliced up and sold off.

“One of our strongest opportunities is in AMP Bank,” Ms George told shareholders.

Brokers are expected to remain key to AMP, with the CEO stating: “The bank also has strong relationships with mortgage brokers, and these relationships are supported by our focus on customer service and efficient loan turnaround times.

“We’ve consistently been ranked by brokers in the top five Australian banks for turnaround times, and this will continue to be a focus for the team.”

Recently, AMP revealed in its third-quarter update that the bank’s residential mortgage book had grown at twice the rate of system growth, over the three months to March.

The home loan book ended March with a balance of $22.2 billion, 2 per cent (or $554 million) higher than the previous quarter.

Ms George noted AMP’s mortgage book had managed to outpace the banking system despite it being a “very competitive market”.

However, the bank will need to stay vigilant in managing risk as it grows, she added.

“With rising interest rates and a more difficult economic environment, we need to ensure that this growth is responsible and not at the expense of increasing the risk profile of the business,” the CEO cautioned.

Fierce competition in home loans

The chair and CEO also faced shareholder questions around the raging competition in mortgage pricing between lenders, driven by low-interest rates, and AMP’s net interest margin (NIM) being squeezed as a result.

However, as the rate has started to creep up, so have funding costs.

“We are very concentrated on making sure we are not looking at profitless growth,” Ms Hazelton said.

Ms George added that the bank only has two products (deposits and mortgages) and so, it “had to compete”. But conditions are beginning to tilt.

“We haven’t been stupid about that, I don’t believe and so we’ve competed where it made sense,” she said.

“And when we look through to the latter half of this year, I think every economist I’ve spoken to would predict that there’s likely to be some interest rate rises and so, we will have some benefits from that in our banking space.

“But we need to manage that book responsibly. And I can assure you, I’m on top of that every single day that we come to work.”

During the annual meeting, the AMP leaders faced many comments from disgruntled shareholders, pointing to a plummeting share price and executive pay raises, despite a lack of dividends.

Ms Hazelton responded by commenting AMP’s leadership is working to better its performance and to address its legacy issues, exposed by the banking royal commission.

Similarly, Ms George said: “My vision for AMP is to restore its standing as a trusted company, helping Australians and New Zealand to [create their] tomorrow and achieve their financial goals.

“We will deliver this through embracing technology and becoming digital first, becoming more customer centric, braver in our decision making, and transparent and open with our commitments, successes and learnings.”

As such, AMP is partnering with fintech platform Nano, to offer a digital mortgage for its customers in the third quarter.

The bank has promised a fully digital experience, with unconditional approval within minutes, depending on the circumstance.

Ms Hazelton also revealed that the board was in the process of adding a new director, with details to soon be released.

[Related: Brokers help drive surge in Plenti’s lending]