AMP LIMITED — Annual Report 2016

Feb 8, 2017

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9 February 2017 Manager Client and Market Services Team ASX Market Announcements NZX Limited Australian Securities Exchange Level 1, NZX Centre, 11 Cable Street Level 4, 20 Bridge Street PO Box 2959 Sydney NSW 2000 Wellington, New Zealand Announcement No: 02/2017 AMP Limited (ASX/NZX: AMP)

Full Year Financial Results

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Part One: Appendix 4E Appendix 3A.1 Part Two: AMP reports FY 16; announces on-market share buy back Part Three: Investor Presentation Part Four: Investor Report Part Five: Appendix 3C

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Public Affairs T 02 9257 6127 E media@amp.com.au W AMP.com.au/media

AMP Limited 33 Alfred Street, Sydney NSW 2000 Australia ABN 49 079 354 519

AMP_AU

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9 February 2017

AMP reports FY 16 results; announces on-market share buy-back

• FY 16 net loss of A$344 million (FY 15 net profit: A$972 million) and underlying profit of A$486 million (FY 15: A$1,120 million) reflecting actions announced in October 2016 to stabilise Australian Wealth Protection.

• Up to A$500 million to be returned to shareholders through on-market share buy-back to begin in Q1 2017. Final dividend maintained at 14 cents a share, franked to 90 per cent. FY 16 dividend 28 cents a share.

• Strong performances by AMP Capital, AMP Bank and New Zealand. Australian Wealth Management resilient in volatile market.

• A$415 million loss in Wealth Protection reflects negative claims experience and capitalised loss; business stabilised and capital released following reinsurance and Part 9 initiatives.

• International expansion in China, Europe and North America continues. China Life AMP Asset Management Company (CLAMP) is the fastest-growing investment manager in China, with assets under management (AUM) rising 55 per cent year on year.

• Disciplined cost management: A$200 million, three-year efficiency program completed in 2016; new efficiency target for 2017.

• Strong capital position with A$2.3 billion surplus on 1 January 2017 following consolidation of life companies. Underlying return on equity 5.6 per cent, down from 13.2 per cent in 2015, reflecting Wealth Protection performance.

AMP Chief Executive Craig Meller said:

The year saw strong results from AMP Capital, AMP Bank, New Zealand and a resilient performance from Wealth Management despite challenging market conditions. However, these results were overshadowed by a poor performance in Wealth Protection.

The wealth protection market deteriorated in 2016 and we took action to re-set and stabilise our business.

Our strategy is focused on directing capital to areas of our portfolio that will deliver the strongest growth including Australian Wealth Management, AMP Capital and AMP Bank.

International expansion is gaining momentum, particularly in China as well as in Europe and North America, where we are exporting our home-grown investment and pension expertise.

AMP’s partnerships with China Life – China’s largest listed insurance group, institutional investor and corporate pension manager – are stronger than ever. Together we are well placed to support the rapidly-evolving investment and pension needs of this growing market.

We have announced an on-market share buy-back of up to A$500 million and maintained our dividend. These actions reflect our strong capital position and positive outlook for the business.

AMP Limited 33 Alfred Street, Sydney, NSW, 2000 ABN 49 079 354 519

Public Affairs T 02 9257 6127 E media@amp.com.au W AMP.com.au/media AMP_AU

AMP reports FY 16 results; announces on-market share buy-back …2

Business unit results

Operating earnings (A$ million)	FY 16	FY 15	% change
Australian Wealth Management	401	410	(2.2)
AMP Capital	144	138	4.3
Australian Wealth Protection	(415)	185	n/a
AMP Bank	120	104	15.4
New Zealand Financial Services	126	120	5.0
Australian Mature	151	158	(4.4)

Australian Wealth Management

The impact of difficult trading conditions was partly offset by effective cost and margin management. AUM was up 5 per cent to A$121 billion following a strong end to the year. Total net cashflows of A$336 million (FY 15: A$2.2 billion) were lower, consistent with an industry-wide slow down amid market and regulatory uncertainty. Improving customer sentiment underpinned a lift in discretionary contributions in Q4 2016.

Targeted product enhancements supported strong cashflows on AMP’s flagship North platform, with net cashflows up 11 per cent on FY 15 and AUM up 30 per cent. Cashflows from AMP Flexible Super reduced as flows switched to North as expected. Corporate super cashflows were lower reflecting the lumpy nature of mandates. AMP’s developing omni-channel advice network, campaigns to capitalise on a more favourable market environment, corporate super pipeline and further product enhancements are expected to support cashflows in 2017 and beyond.

AMP deliberately reduced adviser numbers in 2016 by tightening the classification of authorised representatives. A higher-than-usual number of advisers also decided to retire or leave the industry in the face of challenging industry conditions and increasing education and professional requirements.

AMP Capital

AMP Capital’s strong performance reflected increased fee income driven by growth in real estate and infrastructure investments. Controllable costs increased as the business continued to invest in international growth and build its distribution capability.

External net cashflows were A$967 million (FY 15: A$4.4 billion) and were impacted by challenging market conditions in Australia and Japan, partly offset by good institutional flows into real estate and infrastructure asset classes. FY 16 finished with a strong origination pipeline, including A$3.1 billion of available investor commitments. In China, CLAMP’s AUM increased 55 per cent year on year.

Australian Wealth Protection

Performance was impacted by negative experience and the actions to stabilise the business announced in October 2016, including strengthened assumptions, which led to a one-off capitalised loss of A$484 million. Total experience losses for the year were A$105 million. Claims experience in Q4 2016, capitalised and other one-off losses, and the reduction in embedded value were all within guidance provided in October 2016. AMP group’s reported earnings were also impacted by a A$668 million charge for goodwill impairment as a consequence of declines in the potential recoverable amount of the Australian Wealth Protection business.

AMP reports FY 16 results; announces on-market share buy-back …3

The consolidation of AMP Life and NMLA – a Part 9 transfer – released A$145 million in regulatory capital on 1 January 2017, while a reinsurance agreement for 50 per cent of the AMP Life portfolio (25 per cent of total exposure) released a further A$500 million of regulatory capital. These actions underpinned the board’s decision to return capital to shareholders through an on-market share buy-back. The process for a second tranche of reinsurance is now underway.

AMP Bank

Above system growth in residential mortgages and expansion in net interest margin contributed to 15 per cent growth in operating profit. The bank is investing in operational capacity to support continued growth, with retail mortgage sales via the aligned adviser channel up 24 per cent on FY 15. The bank’s cost to income ratio fell to 29 per cent as the bank benefitted from increased scale.

New Zealand Financial Services

Performance was driven by improved margins in wealth management and experience profits in the life insurance business. Excluding the effect of the loss of transitional tax relief, operating earnings increased 14 per cent, with tight cost management improving the business’s cost to income ratio. AUM increased 9 per cent, reflecting positive market performance and net cashflows.

Australian Mature

Operating earnings of A$151 million reflected anticipated portfolio run off and lower bond yields, partly offset by cost control and better persistency.

Capital management

AMP continues to actively manage capital with Level 3 eligible capital resources A$2,195 million above minimum regulatory requirements at 31 December 2016, up from A$1,917 million at 1 July 2016. Effective 1 January 2017, the consolidation of AMP’s two life companies (AMP Life and NMLA) increased excess regulatory capital by a further A$145 million.

The strengthened capital position also reflects the execution of the reinsurance agreement.

Capital released from reinsurance provides the capacity for capital to be returned to shareholders. An on-market share buy-back of up to A$500 million will begin in Q1 2017.

A FY 16 final dividend has been maintained at 14 cents per share, franked at 90 per cent, with the unfranked amount being declared as conduit foreign income. The total FY 16 dividend is 28 cents a share. This reflects the largely non-cash nature of the one-off losses incurred in Australian Wealth Protection. AMP’s dividend policy target range is 70 to 90 per cent of underlying profit. The dividend reinvestment plan will be neutralised by on-market purchases.

Cost program

AMP’s three-year business efficiency program completed in FY 16 with A$200 million in pre-tax recurring run rate cost benefits delivered in line with expectations.

AMP is committed to a 3 per cent reduction in controllable costs in 2017, excluding AMP Capital and allowing for continued investment in growth businesses and channel experiences. AMP Capital will be managed on a cost to income basis, which is appropriate for the profile and growth ambitions of this business.

AMP reports FY 16 results; announces on-market share buy-back …4

More detailed information on the FY 16 result is available in the FY 16 investor report and presentation, both accessible at shareholdercentre.amp.com.au.

Media teleconference

A conference call for media with Craig Meller (CEO) and Gordon Lefevre (CFO) will be held at 9.30am (AEDT) today, 9 February 2016. Dial in details are as follows:

Australia: Toll free 1800 838 758 New Zealand: Toll free 0800 447 258

Media enquiries Lachlan Johnston Phone: +61 2 9257 9870 Mobile: +61 466 026 702

Investor enquiries Howard Marks Phone: +61 2 9257 7109 Mobile: +61 402 438 019

Adrian Howard Phone: +61 2 9257 6781 Mobile: +61 413 184 488

Michael Leonard Phone: +61 2 9257 5207 Mobile: +61 466 773 093

AMP reports FY 16 results; announces on-market share buy-back …5

Financial Summary

**A$m **	FY 16	FY 15
Profit and loss
Australian Wealth Management	401	410
AMP Capital	144	138
Australian Wealth Protection	(415)	185
AMP Bank	120	104
New Zealand Financial Services	126	120
Australian Mature	151	158
BU operating earnings	527	1,115
Group Office costs	(104)	(61)
Total operating earnings	423	1,054
Underlying investment income	122	125
Interest expense on corporate debt	(59)	(59)
Underlying profit/(loss)	486	1,120
Other items	(9)	(3)
Business efficiency program costs	(19)	(66)
Amortisation of AXA acquired intangible assets	(77)	(80)
Goodwill impairment	(668)	-
Profit/(loss) before market adjustments and accounting mismatches	(287)	971
Market adjustment - investment income	(46)	9
Market adjustment - annuity fair value	(8)	34
Market adjustment - risk products	11	2
Accounting mismatches	(14)	(44)
Profit/(loss) attributable to shareholders of AMP Limited	(344)	972

AMP reports FY 16 results; announces on-market share buy-back …6

Q4 16 cashflows Australian Wealth Management

Australian Wealth Management	Cash inflows		Cash outflows		Net cashflows
Cashflows by product (A$m)	Q4 16	Q4 15	Q4 16	Q4 15	Q4 16	Q4 15
North1 AMP Flexible Super2 Summit, Generations and iAccess3 Flexible Lifetime Super (superannuation and pension)4 Other retail investment and platforms5	3,325 1,085 229 392 65	2,770 1,671 393 503 129	(2,144) (1,130) (614) (795) (83)	(1,656) (1,355) (739) (905) (133)	1,181 (45) (385) (403) (18)	1,114 316 (346) (402) (4)
Total retail on AMP platforms	5,096	5,466	(4,766)	(4,788)	330	678
SignatureSuper and AMP Flexible Super - Employer Other corporate superannuation6	843 586	1,304 435	(705) (628)	(613) (681)	138 (42)	691 (246)
Total corporate superannuation	1,429	1,739	(1,333)	(1,294)	96	445
Total retail and corporate super on AMP platforms	6,525	7,205	(6,099)	(6,082)	426	1,123
External platforms7	358	446	(703)	(750)	(345)	(304)
Total Australian Wealth Management	6,883	7,651	(6,802)	(6,832)	81	819
Australian Wealth Management cash inflow composition (A$m)
Member contributions	913	854
Employer contributions	1,018	1,075
Total contributions Transfers and rollovers in8	1,931 4,838	1,929 5,632
Other cash inflows	114	90
Total Australian Wealth Management	6,883	7,651

1 North is a market leading, fully functioning wrap platform, which includes guaranteed and non-guaranteed options.

• 2 AMP Flexible Super is a flexible all-in-one superannuation and retirement account for individual retail business.

3 Summit and Generations are owned and developed platforms. iAccess is ipac’s badge on Summit.

4 Flexible Lifetime Super (superannuation and pension) was closed to new business from 1 July 2010. A small component of corporate superannuation schemes are included.

5 Other retail investment and platforms include Flexible Lifetime - Investments, AMP Personalised Portfolio and Synergy. The Synergy platform was closed in Q2 2016, with customer accounts transferred to North.

6 Other corporate superannuation comprises CustomSuper, SuperLeader and Business Super.

7 External platforms comprise Asgard, Macquarie and BT Wrap platforms.

8 Transfers and rollovers in includes the transfer of accumulated member balances into AMP from both internal (eg retail superannuation to allocated pension/annuities) and external products.

Australian Wealth Management	Q3 16	Q4 16 Net cashflows	Q4 16 Net cashflows		Total		Q4 16
AUM (A$m)	AUM	Superannuation	Pension	Investment	net cashflows	Other movements1	AUM
North	25,241	421	470	290	1,181	670	27,092
AMP Flexible Super	15,660	78	(123)	-	(45)	333	15,948
Summit, Generations and iAccess	12,190	(153)	(158)	(74)	(385)	348	12,153
Flexible Lifetime Super (superannuation and pension)	23,613	(266)	(137)	-	(403)	626	23,836
Other retail investment and platforms	2,428	-	-	(18)	(18)	45	2,455
Total retail on AMP platforms	79,132	80	52	198	330	2,022	81,484
SignatureSuper and AMP Flexible Super - Employer	15,583	123	15	-	138	403	16,124
Other corporate superannuation	12,528	(42)	-	-	(42)	284	12,770
Total corporate superannuation	28,111	81	15	-	96	687	28,894
Total retail and corporate superannuation on AMP platforms	107,243	161	67	198	426	2,709	110,378
External platforms	10,891	(123)	(124)	(98)	(345)	209	10,755
Total Australian Wealth Wanagement	118,134	38	(57)	100	81	2,918	121,133
Australian Wealth Management - SuperConcepts2
Assets under administration	22,201					160	22,361

1 Other movements include fees, investment returns, distributions and taxes. 2 SuperConcepts assets under administration includes AMP SMSF, Multiport, Cavendish, SuperIQ, yourSMSF and Ascend administration platforms, but does not include Multiport Annual and JustSuper.

Australian Wealth Management	Q3 16	Q4 16
AUM (A$m)	AUM	AUM
AUM by product
Superannuation	69,059	70,919
Pension	35,137	35,856
Investment	13,938	14,358
Total	118,134	121,133
AUM by asset class
Cash and fixed interest	31%	31%
Australian equities	32%	31%
International equities	26%	26%
Property	6%	6%
Other	5%	6%
Total	100%	100%

AMP reports FY 16 results; announces on-market share buy-back …7

Australian Wealth Management	Q3 16	Q4 16
AUM summary (A$b)	AUM	AUM
Closing AUM	118.1	121.1
Average AUM	117.8	118.1

AMP Capital

AMP Capital	Q3 16	Q4 16 Net cashflows		Total		Q4 16
AUM (A$m)	AUM	Cash inflows	Cash outflows	net cashflows	Other movements1	AUM
External	54,361	4,097	(3,475)	622	666	55,649
Internal	108,150	9,306	(10,042)	(736)	2,337	109,751
Total AMP Capital	162,511	13,403	(13,517)	(114)	3,003	165,400
AMP Capital	Q3 16	Q4 16
AUM summary (A$b)	AUM	AUM
Closing AUM	162.5	165.4
Average AUM	163.2	161.7

1 Other movements include investment returns, distributions, taxes and foreign exchange movements.

New Zealand Financial Services

New Zealand Financial Services	Cash inflows	Cash inflows			Cash outflows			Net cashflows	Net cashflows
Cashflows by product (A$m)	Q4	16	Q4 15		Q4 16	Q4 15		Q4 16	Q4 15
KiwiSaver	145		150		(100)		(84)	45	66
Other1	415		228		(284)	(237)		131	(9)
Total New Zealand	560		378		(384)	(321)		176	57
New Zealand Financial Services	Q3 16		Q4 16	Net cashflows			Total		Q4 16
AUM (A$m)	AUM	Superannuation	Pension		Investment	Other	net cashflows	Other movements2	AUM
KiwiSaver	4,101	45		-	-	-	45	69	4,215
Other1	10,809	173		(1)	(55)	14	131	(45)	10,895
Total New Zealand	14,910	218		(1)	(55)	14	176	24	15,110

1 Other New Zealand financial services cashflows and AUM include New Zealand wealth protection, mature and non–KiwiSaver wealth management products.

2 Other movements include fees, investment returns, taxes, as well as foreign currency movements on New Zealand AUM.

New Zealand Wealth Protection	Q3 16	Q4 16
Risk Insurance Annual Premium In-force – API (A$m)	API	API
Individual lump sum	236	243
Individual income protection	48	45
Grouprisk	37	39
Total	321	327

Australian Mature

Australian Mature	Cash inflows	Cash inflows			Cash outflows			Net cashflows	Net cashflows
Cashflows by product (A$m)	Q4	16	Q4 15		Q4 16	Q4 15		Q4 16	Q4 15
Australian Mature	141		154		(476)	(539)		(335)	(385)
Australian Mature	Q3 16		Q4 16	Net cashflows			Total		Q4 16
AUM (A$m)	AUM	Superannuation	Pension		Investment	Other	net cashflows	Other movements1	AUM
Australian Mature	21,642	(155)		(46)	(21)	(113)	(335)	(125)	21,182

1 Other movements include fees, investment returns, distributions and taxes.

AMP reports FY 16 results; announces on-market share buy-back …8

AMP Bank

AMP Bank by product	Q3 16		Q4 16
Deposits and loans (A$m)	end balance	Other movements1	end balance
Deposits (Supercash, Super TDs & Platform TDs)2	5,124	49	5,173
Deposits (retail)2	5,915	(321)	5,594
Deposits (Other)2	790	(8)	782
Loans	16,557	563	17,120

1 Represents movements in AMP Bank’s deposits and loan books.

2 At 31 Dec 2016, deposits include AMP Bank retail deposits (A$5.6b), AMP Supercash and Super TDs (A$2.2b), North and platform deposits (A$3.0b), internal deposits (A$0.6b) and other wholesale deposits (A$0.1b).

Australian Wealth Protection

Australian Wealth Protection	Cash inflows	Cash inflows		Cash outflows		Net cashflows
Cashflows by product (A$m)	Q4 16		Q4 15	Q4 16	Q4 15	Q4 16	Q4 15
Individual risk		368	376	(139)	(180)	229	196
Grouprisk		92	109	(76)	(81)	16	28
Total Australian Wealth Protection		460	485	(215)	(261)	245	224
Australian Wealth Protection	Q3 16	Q4 16
Annual Premium In-force – API (A$m)	API	API
Individual lump sum	1,135	1,122
Individual income protection	403	400
Grouprisk	446	442
Total	1,984	1,964