AMP Limited

The Business

AMP operates two connected businesses. Platforms, its retail investment and superannuation administration arm trading as North, provides advisers with technology to manage client portfolios and generated $385 million of revenue in FY26, roughly 29% of the group total. Advice & Investments (S&I) serves financial advisers directly. AMP Bank is a deposit-taking retail bank with a shrinking loan book. Its remaining pieces, NZ Wealth and a set of Chinese pension and asset management partnerships, round out a five-segment structure best understood as a conglomerate wrapped around a wealth platform.

Recent Performance

The shares have re-rated meaningfully over the past two years as the transformation gained traction, with earnings per share growing 25.6% in FY25 and a further 21.2% in FY26, off a low base still recovering from years of remediation costs. Revenue growth has been far more modest, up just 2.8% and 3.7% respectively, meaning most of the earnings acceleration came from a shrinking cost base and falling share count rather than from the business selling more.

Outlook

Revenue growth is expected to remain modest over the next two years, as continued momentum in platforms and advice is partly offset by a deliberately shrinking bank loan book. Operating margins, which expanded sharply as cost cuts landed, are expected to compress back from recent highs as fee margins keep eroding a few basis points a year and one-off tax benefits fade. The net effect is that underlying profit is expected to stay roughly flat over the next two years, even as revenue continues to grow at a low single-digit pace.

Key Risks

Fee compression on the Platforms business is the most probable of the major risks, given the trend is already visible in two consecutive years of margin data; an acceleration in the pace of erosion would strip out organic revenue growth almost entirely. A meaningful correction in Australian equity markets would reduce funds under management across the platform and advice businesses, cutting annual profit and likely reversing the advice segment's recent return to positive cashflows, given that around 60% of group revenue is linked to asset values. Disruption to AMP's Chinese pension joint ventures, though a minority stake, carries the largest single impact on our risk assessment, since any diplomatic rupture between Australia and China would likely force a distressed rather than orderly exit.

What to Watch

The thesis-defining event is the FY26 full-year result in February 2027, which will confirm whether fee margins are stabilising and whether the advice business can sustain positive cashflows through a full year.

• Feb 2027 FY26 full-year results: will confirm or challenge the fee compression and cashflow assumptions underpinning our forecast.
• Nov 2026 $275m corporate debt refinancing: successful execution would remove a near-term liquidity overhang.

Latest Developments

AMP's first-half 2026 result showed platform net cashflows of $3.1 billion, up 33% year on year, alongside confirmation that the advice and investments arm remains cashflow positive. Management held the capital return program steady, signalling confidence in near-term earnings despite the flat medium-term profit outlook embedded in guidance.

Company Description

AMP operates five segments. Platforms (North) administers superannuation and investment accounts for financial advisers and is the largest single contributor, generating $385 million of revenue in FY26, around 29% of the group. Advice & Investments (S&I) provides licensing, research and investment products to aligned and independent advisers, contributing $365 million. AMP Bank is a retail deposit-taker and mortgage lender with $333 million of revenue, though its loan book is deliberately shrinking as capital is redirected elsewhere. NZ Wealth, a smaller superannuation and investment business, contributes $128 million. The final segment houses AMP's minority stakes in two Chinese pension and asset management joint ventures and contributed $124 million.

Where the Growth Is

Platforms is the clear growth engine, generating net cashflows of $3.1 billion in the first half of 2026, up 33% on the prior year and now close to 30% of the segment revenue base. The driver is straightforward: advisers are consolidating client assets onto North because of its Managed Portfolios feature, growing assets under management around 30% a year. The offset is structural rather than cyclical: platform fee margins have fallen from 45 to 41 basis points over two years, and we model continued erosion of roughly 2 basis points annually, capping net organic revenue growth even as assets under management climb 8% a year.

Competitive Position

North is rated the number one platform by independent adviser research, and that ranking matters because platform switching is costly and disruptive for advisers managing hundreds of client accounts, creating genuine lock-in once a practice is onboarded. Scale reinforces the advantage: AMP administers tens of billions in assets, spreading technology and compliance costs across a base smaller platforms cannot match. That said, the position is narrow rather than dominant. Pure-play platform operators, HUB24 and Netwealth, are growing cashflows two to three times faster than AMP's platform and are taking share at the margin, even as AMP defends its existing book. Regulatory licensing requirements create a genuine barrier against new entrants, but do nothing to stop established rivals undercutting on price, which is precisely what has driven the fee compression evident in the segment data. We see this position holding for three to five years without material erosion, not longer.

Management & Capital Discipline

Management has cut the annual cost base from $648 million to $603 million, a genuine structural reset rather than a one-off saving, and has used the resulting surplus capital for buybacks executed at roughly 11 times earnings, an accretive price. The payout ratio remains conservative at 44%, leaving room for further capital return without stretching the balance sheet. Where the record is thinner is at the top: chief executive Vernon has been in the role for under six months, inheriting a well-run operational machine but with no track record yet on the bigger strategic calls, including the eventual fate of AMP Bank and how the group deploys capital once the current buyback runway is exhausted.

Financial Position

AMP's balance sheet is in its healthiest state in years following the legacy remediation and divestment program, with financial health assessed as adequate rather than exceptional. The bank arm maintains a capital surplus above regulatory minimums, and a $275 million corporate debt refinancing due in November 2026 is expected to proceed without disruption given the improved balance sheet. The clearest watch point is the pace at which surplus capital, currently funding buybacks, gets consumed: if that buffer falls materially without an offsetting release of capital from the bank, the buyback program driving per-share earnings growth would need to slow.