In my first year as CEO, we have set the foundations to turn our business around.
2019 was a year of fundamental reset for our business as we took bold but necessary action to address legacy issues and position AMP for the future. This was a critical first step in our transformational strategy to become a client-led, simpler, growth-oriented company and rebuild a business that you, our shareholders, can be proud of.
As a three-year strategy, there is still much to do, but I’m confident we’re on the right course. We are driven by our purpose and motivated by our shared desire to serve our clients.
AMP was founded on a simple yet bold idea: that financial security enables people to live with dignity. Our commitment to improving financial literacy and making advice affordable to all Australians will help our clients live with the dignity that has been core to AMP’s purpose for over 170 years.
AMP’s commitment to our clients and the community remains as strong as it has ever been. The character of our company was on full display in 2019. The AMP Foundation continued to support the broader community, donating its 100 millionth dollar to a deserving charity partner. And following the devastating bushfires over the summer, AMP answered the call. We partnered with advisers to offer pro bono advice and other relief packages, while AMP employees and the AMP Foundation contributed financially to the Australian Red Cross Disaster Relief Appeal.
Our performance in 2019 reflects the ongoing challenges we face as a business but was broadly in line with our guidance.
Our underlying profit was $464 million, down from $680 million in 2018, following a decline in earnings in Australian wealth management. The net loss attributable to shareholders for the year was $2.5 billion. This is due to a predominantly non-cash impairment of $2.35 billion (post-tax) taken in the first half of 2019 to reset the business and support the new strategy.
AMP Capital had an outstanding year, particularly in infrastructure and real estate investments. In 2019, AMP Capital delivered two of the 10 largest infrastructure fundraisings in the world. AMP Bank put in a resilient performance in a competitive market, growing both deposits and residential loans.
Australian wealth management increased its assets under management over the year but its earnings were lower as we looked to improve competitiveness by reducing fees, among other factors. We are working hard at reinventing our wealth business – it will take time, but we have taken some important steps in 2019, including the fundamental reshape of our advice network.
In New Zealand wealth management we saw a resilient underlying performance. Ongoing legislative change impacted the performance of AMP Life, our life insurance and mature business, which we have agreed to sell to Resolution Life.
In 2019, AMP made significant progress in delivering three complex but fundamental priorities. These priorities are critical to laying the foundation for our new strategy.
We reached a revised agreement for the sale of AMP Life to Resolution Life, expected to complete by 30 June 2020. We firmly believe the sale is in the best interests of policyholders and the company over the long term.
Our client remediation program is on track for completion in 2021 and we are doing everything we can to do this as quickly as possible. Putting things right for our clients is paramount – not only is it the right thing to do, it ensures we can focus on building our future.
And AMP’s risk, governance and control settings have been strengthened through a $100 million (pre-tax) investment program, which will be complete by the end of 2020.
In 2019, we announced a bold, three-year transformational strategy that will put clients first, simplify the business and drive growth and returns for shareholders.
We have a clear motivation to get there – AMP is ambitious, because we’re ambitious for our clients.
AMP is in a unique position as a result of the disruption in the market currently. There is a growing need for advice amongst Australians – through face-to-face and digital services enabled by leading technology. We are well placed to develop whole-of-wealth offers encompassing advice, wealth and banking services to better serve our clients.
To support our strategy, we are committed to transforming our culture and improving our execution. In addition, we’ll create a simpler and leaner business, through a multi-year cost-out program.
In 2020, our focus will be on execution; we will meet our strategic priorities and implement a clear roadmap for delivering our three-year strategy.
We will simplify our portfolio by completing the sale of AMP Life, which will accelerate the simplification of our superannuation business. The reshape of our advice network will progress and we will capitalise on those areas of our business, like AMP Capital, AMP Bank and our platform business, that are performing strongly and continue to drive further growth.
This has been a challenging period for our business and I want to pay tribute to the resilience and professionalism shown by our employees. We are all energised by our mission. It will take a concerted team effort to build the new AMP and I know our employees are ready for the challenge. With your ongoing support, I’m confident we can harness this unique opportunity to reinvent our iconic business.
Chief Executive Officer