AMP LIMITED — Interim / Quarterly Report 2017

Aug 9, 2017

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10 August 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: 26/2017 AMP Limited (ASX/NZX: AMP)

Half Year Financial Results

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Part One: Appendix 4D

Appendix 3A.1

• Part Two: AMP reports A$445 million net profit 1H 17; announces new reinsurance agreements

• Part Three: Investor Presentation

• Part Four: Investor Report

• Part Five: Directors‘ Report and Financial Report

• Part Six: Appendix 3D

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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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10 August 2017

AMP reports 1H 17 results; announces new reinsurance agreements

• Underlying profit[1] A$533 million in 1H 17, up 4 per cent (1H 16: A$513 million), and net profit[2] of A$445 million (1H 16: A$523 million).

• Completion of reinsurance program delivers on strategy, with new arrangements to release approximately A$500 million of capital from AMP Life (subject to regulatory approval) further reducing the capital intensity of the wealth protection business.

• Strong continued growth momentum in AMP Bank and AMP Capital.

• Australian wealth management resilient amid elevated margin compression; net cashflows rose 76 per cent to A$1,023 million; growth in revenue from Advice and SMSF to accelerate from 2H 17.

• Australian wealth protection earnings increased 11 per cent to A$52 million (1H 16: A$47 million), reflecting steps taken to stabilise the business.

• Sustained cost management on track to deliver 3 per cent reduction in controllable costs (ex AMP Capital) by FY 17.

• Strong capital position with A$1.9 billion over minimum regulatory requirements. Interim dividend increased to 14.5 cents a share, franked to 90 per cent.

• Underlying return on equity was 14.5 per cent in the half, up from 11.9 per cent at 1H 16.

Wealth protection: reinsurance update

AMP today announced a series of new reinsurance agreements, delivering on its strategy to release capital from the Australian wealth protection business and reduce future earnings volatility.

Releasing approximately A$500 million in capital from AMP Life (subject to regulatory approval), the new reinsurance agreements include:

• A new quota share agreement with General Reinsurance Life Australia Limited (Gen Re) to cover 60 per cent of the NMLA retail portfolio, which was merged with AMP Life on 1 January 2017.

• An extension to the existing agreement with Munich Reinsurance Company of Australasia Limited (Munich Re) to cover 60 per cent (up from 50 per cent) of the AMP Life retail portfolio.

• A new surplus cover agreement with Gen Re to assist in managing risk and volatility in individual retail claims.

• Recapture of 35 existing reinsurance treaties, simplifying AMP’s overall reinsurance arrangements.

The new reinsurance agreements will commence on 1 November 2017 and, when combined with the first tranche of reinsurance completed in 2016, effectively means 65 per cent of AMP’s retail life insurance portfolio will be reinsured for claims incurred from 1 November 2017.

1 Underlying profit is the basis on which the AMP Board determines the dividend payment and reflects the business performance of AMP. It is AMP’s key measure of business profitability as it normalises investment market volatility stemming from shareholder assets invested in investment markets and aims to reflect the trends in the underlying business performance of the AMP group.

2 AMP’s profit measures exclude MUFG: Trust Bank’s (formerly MUTB) 15 per cent share of AMP Capital’s earnings.

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 1H 17 results; announces new reinsurance agreements …2

AMP Chief Executive Craig Meller said:

In the first half, we’ve made good progress on the delivery of our strategy.

In wealth protection, we’ve completed a set of comprehensive reinsurance agreements, which will release capital from AMP Life and reduce earnings volatility.

We’ve continued to drive strong growth in the bank, growing above system while maintaining a conservative lending approach.

In wealth management, we’ve delivered a solid performance, managing margin compression effectively and showing our strength as the market leader for superannuation during a period of heightened market activity due to MySuper transitions.

And we’ve driven international growth with AMP Capital growing strongly and underlining its emerging reputation as a global leader in real estate and infrastructure investments with strong flows to these asset classes. Our partnerships in China are also performing well, growing both cashflows and assets under management.

Overall, it’s a solid performance underpinned by strong cost management that steps us toward our strategy of transitioning to a higher-growth, capital-light business with a more internationally diverse revenue profile.

Business unit results

Business unit results
Operating earnings (A$ million)	1H 17	1H 16	% change
Australian wealth management	193	195	(1.0)
AMP Capital	92	83	10.8
AMP Bank	65	59	10.2
Australian wealth protection	52	47	10.6
New Zealand financial services	65	62	4.8
Australian mature	75	69	8.7

Australian wealth management

Australian wealth management operating earnings, down 1 per cent to A$193 million, were resilient. The result demonstrates effective margin management during the final transitions to low-cost MySuper funds and amid significant activity across the superannuation industry. MySuper transitions completed in 1H 17 with margin compression expected to continue to be around 5 per cent this year.

Net cashflows were significantly higher in 1H 17, with stronger inflows from discretionary super contributions ahead of 1 July changes to non-concessional caps. The transition of corporate super mandates also supported inflows, with one mandate bringing more than 3,700 new customers to AMP. During the period, AMP paid A$1.3 billion in pensions to help customers through their retirement.

AMP’s flagship North platform performed well in 1H 17, with flows up 8 per cent and AUM up 13 per cent on FY 16. North now has more than A$30 billion in assets under management.

To offset the impact of margin compression, AMP is targeting additional revenue growth from its Advice and SMSF businesses, which is reported in the Other revenue line. AMP expects Other revenue to increase by 10 per cent in FY 17, with growth in Advice and SMSF revenues emerging in

AMP reports 1H 17 results; announces new reinsurance agreements …3

2H 17 and accelerating into 2018. This will support the delivery of AMP’s target of 5 per cent overall revenue growth in Australian wealth management through the cycle.

AMP Capital

AMP Capital delivered strong growth in operating earnings, up 11 per cent to A$92 million, benefiting from good growth in fee income. External assets under management fees rose by 6 per cent to A$132 million and non-AUM based management fees also increased, benefiting from growth in real estate development fee revenue.

External net cashflows increased to A$2.4 billion, with significant cash inflows into fixed income and higher-margin real assets. Real assets proved popular with investors wanting exposure to leading infrastructure and real estate investments.

Delivering on its strategy to expand internationally, AMP Capital grew its number of direct international institutional clients from 199 at FY 16 to 252 in 1H 17 and now manages A$10 billion in assets on their behalf. In China, AMP Capital’s asset management joint venture, China Life AMP Asset Management (CLAMP), continues to grow rapidly with AUM increasing 22 per cent to RMB 141 billion (A$27.1 billion) in 1H 17. Total AUM for China Life Pension Company, the pensions joint venture in which AMP owns a 19.99 per cent stake, grew 8 per cent to RMB 408.2 billion (A$78.5 billion) in 1H 17.

At 30 June 2017, AMP Capital had A$3.5 billion of committed funds available for investment including funds raised in its Infrastructure Debt Fund III (IDFIII), which has attracted strong international interest.

AMP Bank

Strong growth momentum continued in AMP Bank, with operating earnings up 10 per cent to A$65 million, driven by 17 per cent growth in lending to A$18.8 billion. The bank maintained a conservative credit policy and asset quality remains high. Mortgage sales through AMP’s aligned adviser channel increased 49 per cent on 1H 16. Net interest margin declined 4 basis points from 1H 16 but improved 4 basis points on 2H 16.

The cost to income ratio rose slightly to 29 per cent, with controllable costs increasing by A$4 million reflecting ongoing investment to support growth. Lending growth in the bank is expected to moderate in the second half as the market adjusts to new regulatory requirements.

Australian wealth protection

Actions undertaken in 2016 to stabilise and reset the business are working and have delivered an improved result. Operating earnings rose 11 per cent, with improved experience offsetting lower profit margins.

The announcement of further reinsurance agreements, completing the strategic reinsurance program, lessens exposure to retail claims volatility and will further stabilise wealth protection earnings. AMP continued to support customers during their time of need, paying A$575 million in claims during the six months to 30 June.

New Zealand financial services

Operating earnings, up 5 per cent to A$65 million, reflect higher experience profits. AUM increased 6.9 per cent to A$15.5 billion on positive markets.

A strong focus on cost management supported a reduction in controllable costs by 3 per cent to A$38 million and improved the cost to income ratio by 1.4 percentage points to 27.2 per cent.

AMP reports 1H 17 results; announces new reinsurance agreements …4

Australian mature

Operating earnings are up A$6 million from 1H 16 to A$75 million due to strong markets, lower controllable costs and improved experience.

Capital and dividend

AMP’s capital position remains strong, with level 3 eligible capital resources A$1,887 million above minimum regulatory requirements at 30 June 2017, down from A$2,195 million at 31 December 2016. The reduction largely reflects capital returned to shareholders through an on-market share buy back and investment in business growth during the period. The new reinsurance agreements are expected to release up to an additional A$500 million from AMP Life (subject to regulatory approval).

The interim dividend has been increased to 14.5 cents per share, franked at 90 per cent. The 1H 17 dividend payout is within AMP’s stated target range of 70 to 90 per cent of underlying profit.

More detailed information on the 1H 17 result is available in the 1H 17 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 9.15am (AEST) today, 10 August 2017. Dial in details:

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

Rhiannon Hornsey Mobile: +61 428 404 345

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

Mark Roberts Phone: +61 2 9257 1086 Mobile: +61 466 328 581

AMP reports 1H 17 results; announces new reinsurance agreements …5

Q2 17 cashflows

Australian wealth management

Australian wealth management	Cash inflows		Cash outflows		Net cashflows
Cashflows by product (A$m)	Q2 17	Q2 16	Q2 17	Q2 16	Q2 17	Q2 16
North1	5,727	3,998	(3,886)	(2,154)	1,841	1,844
AMP Flexible Super2	1,598	1,442	(1,618)	(1,306)	(20)	136
Summit, Generations and iAccess3	786	441	(1,255)	(809)	(469)	(368)
Flexible Lifetime Super (superannuation and pension)4	669	630	(976)	(921)	(307)	(291)
Other retail investment and platforms5	78	55	(96)	(679)	(18)	(624)
Total retail on AMP platforms	8,858	6,566	(7,831)	(5,869)	1,027	697
SignatureSuper and AMP Flexible Super - Employer	1,508	852	(649)	(637)	859	215
Other corporate superannuation6	475	458	(660)	(528)	(185)	(70)
Total corporate superannuation	1,983	1,310	(1,309)	(1,165)	674	145
Total retail and corporate superannuation on AMP platforms	10,841	7,876	(9,140)	(7,034)	1,701	842
External platforms7	608	365	(1,087)	(834)	(479)	(469)
Total Australian wealth management	11,449	8,241	(10,227)	(7,868)	1,222	373
Australian wealth management cash inflow composition (A$m)	Q2 17	Q2 16
Member contributions	2,075	1,079
Employer contributions	1,253	1,252
Total contributions	3,328	2,331
Transfers, rollovers in and other8	8,121	5,910
Total Australian wealth management	11,449	8,241

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, rollovers in and other includes the transfer of accumulated member balances into AMP from both internal (e.g. retail superannuation to allocated pension/annuities) and external products.

Australian wealth management	Q1 17		Q2 17 Net cashflows		Total		Q2 17
AUM (A$m)	AUM	Superannuation	Pension	Investment	net cashflows	Other movements1	AUM
North	28,665	1,312	204	325	1,841	18	30,524
AMP Flexible Super	16,129	323	(343)	-	(20)	220	16,329
Summit, Generations and iAccess	12,120	151	(526)	(94)	(469)	65	11,716
Flexible Lifetime Super (superannuation and pension)	23,883	(80)	(227)	-	(307)	294	23,870
Other retail investment and platforms	2,482	-	-	(18)	(18)	16	2,480
Total retail on AMP platforms	83,279	1,706	(892)	213	1,027	613	84,919
SignatureSuper and AMP Flexible Super - Employer	16,469	847	12	-	859	194	17,522
Other corporate superannuation	12,814	(185)	-	-	(185)	140	12,769
Total corporate superannuation	29,283	662	12	-	674	334	30,291
Total retail and corporate superannuation on AMP platforms	112,562	2,368	(880)	213	1,701	947	115,210
External platforms	10,227	34	(335)	(178)	(479)	87	9,835
Total Australian wealth management	122,789	2,402	(1,215)	35	1,222	1,034	125,045
Australian wealth management - SuperConcepts2 Assets under administration	22,472					92	22,564

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

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AMP reports 1H 17 results; announces new reinsurance agreements …6

Australian wealth management	Q1 17	Q2 17
AUM summary (A$b)	AUM	AUM
AUM by product
Superannuation	71,786	74,783
Pension	36,475	35,596
Investment	14,528	14,666
Total	122,789	125,045
AUM by asset class
Cash and fixed interest	31%	31%
Australian equities	32%	31%
International equities	25%	26%
Property	6%	6%
Other	6%	6%
Total	100%	100%
Australian wealth management	Q1 17	Q2 17
AUM summary (A$b)	AUM	AUM
Closing AUM	122.8	125.0
Average AUM	121.0	124.2

AMP Capital

AMP Capital	Q1 17	Q2 17 Net	cashflows	Total	Other	Q2 17
AUM (A$m)	AUM1	Cash inflows	Cash outflows	net cashflows	movements2	AUM
External	55,252	5,755	(3,544)	2,211	750	58,213
Internal	120,761	8,531	(9,091)	(560)	477	120,678
Total AMP Capital	176,013	14,286	(12,635)	1,651	1,227	178,891
AMP Capital	Q1 17	Q2 17
AUM summary (A$b)	AUM1	AUM
Closing AUM	176.0	178.9
Average AUM	175.0	178.8

1 Q1 17 AUM has been restated to include transitioned AUM of $10.3b relating to two funds on which AMP Capital now earns investment management fees. Reflects reset of Investment Management Agreement between Australian wealth management and AMP Capital from 1 January 2017.

2 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$m)	Q2	17	Q2 16		Q2 17	Q2 16		Q2 17	Q2 16
KiwiSaver	157		143		(98)		(87)	59	56
Other1	234		199		(262)		(242)	(28)	(43)
Total New Zealand	391		342		(360)		(329)	31	13
New Zealand financial services	Q1 17		Q2 17	Net cashflows			Total		Q2 17
AUM (A$m)	AUM	Superannuation	Pension		Investment	Other	net cashflows	Other movements2	AUM
KiwiSaver	4,184	59		-	-	-	59	194	4,437
Other1	10,605	(11)		(1)	(32)	16	(28)	530	11,107
Total New Zealand	14,789	48		(1)	(32)	16	31	724	15,544

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	Q1 17	Q2 17
Risk Insurance Annual Premium In-force – API (A$m)	API	API
Individual lump sum	231	241
Individual income protection	43	44
GroupRisk	36	38
Total	310	323

AMP reports 1H 17 results; announces new reinsurance agreements …7

Australian mature

Australian mature	Cash inflows	Cash inflows			Cash outflows			Net cashflows	Net cashflows
Cashflows by product (A$m)	Q2	17	Q2 16		Q2 17	Q2 16		Q2 17	Q2 16
Australian mature	188		161		(589)		(529)	(401)	(368)
Australian mature	Q1 17		Q2 17	Net cashflows			Total		Q2 17
AUM (A$m)	AUM	Superannuation	Pension		Investment	Other	net cashflows	Other movements1	AUM
Australian mature	21,111	(198)		(47)	(22)	(134)	(401)	370	21,080

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

AMP Bank

AMP Bank by product	Q1 17		Q2 17
Deposits and loans (A$m)	end balance	Other movements1	end balance
Deposits (super and platform)2	5,112	57	5,169
Deposits (retail)2	6,272	207	6,479
Deposits (other)2	782	5	787
Loans	17,907	870	18,777

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

2 At 30 Jun 2017, deposits include AMP Bank retail deposits (A$6.5b), AMP Supercash and Super TDs (A$2.1b), North and platform deposits (A$3.1b), 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$m)	Q2 17		Q2 16	Q2 17	Q2 16	Q2 17	Q2 16
Individual risk		367	363	(145)	(178)	222	185
Grouprisk		111	112	(91)	(86)	20	26
Total Australian wealthprotection		478	475	(236)	(264)	242	211
Australian wealth protection	Q1 17	Q2 17
Annual Premium In-force – API (A$m)	API	API
Individual lump sum	1,107	1,094
Individual income protection	396	396
GroupRisk	440	440
Total	1,943	1,930