GICS - Div. Financials

AMP Limited ASX Code: AMP Price: $1.025 12 Mth Target Price: $1.25 Rating: Neutral - High

Business Summary Snapshot AMP Limited (AMP) operates in and as a provider of Date 4 October 2021 superannuation, , investments and advice, as well as retail Market Cap. $3,348m Shares on issue 3,266.1m , and internationally with strong partnerships in China and 12 Month High $1.77 Japan and investments around the world. 12 Month Low $0.89 AMP Australia: In November 2019, AMP brought together its Australian Rating wealth management and AMP divisions under one leadership team. Rating Neutral - High Risk The businesses will continue to provide clients with financial advice services 12 Mth Target Price $1.25 (through aligned and owned advice businesses), platform and software Capital Gain 22.0% administration (including SMSF), unit linked superannuation, retirement Gross Yield 5.7% Implied Total Return income and managed investment products business in Australia. As well as 27.7% providing customers with residential mortgages, deposits, transaction banking Investment Fundamentals and SMSF products. FYE 31 Dec 2020A 2021F 2022F 2023F AMP Capital: AMP Capital manages investments in equities, fixed income, Profit $m 362.0 357.0 389.0 459.0 diversified, multi-manager and multi-asset funds on behalf of clients globally. Profit (norm)* $m 362.0 357.0 389.0 459.0 AMP Capital also manages real estate and infrastructure assets including shopping centres, airports, trains and pipelines. In Asia, AMP have partnered EPS* ¢ 10.0 10.0 12.0 14.0 with two groups, MUFG: Trust Bank of Japan and China EPS Growth % -23.1 0.0 20.0 16.7 Life. P/E* x 10.2 10.2 8.5 7.3 P/E Relative % 0.0 0.0 0.0 0.0 New Zealand Wealth Management (NZWM): NZWM provides wealth DPS ¢ 10.0 0.0 5.0 8.0 management and financial advice and distribution business in New Zealand. Yield % 9.8 0.0 4.9 7.8 Customers are provided with a variety of wealth management solutions Franking % 100.0 0.0 50.0 50.0 including KiwiSaver, corporate superannuation, retail investments and a wrap * Adjusted for goodwill and unusual items investment management platform. Source: Based on Citi estimates Latest Research Share Price Chart Some +ve signs but still a long way to go with 2H guided to fall While AMP has clearly made some progress in 1H21, there is still a long way to go. There will be no dividend until at least 1H22 and earnings are guided to fall in 2H. However given the 1H beat on higher “investment earnings” we nonetheless lift our FY21E by 3% with little change to later years. As a new CEO takes the helm, it still remains unclear what shape AMP Capital will be in by the time of its targeted private capital markets demerger with its profit currently on a declining path. Further, while its remediation program is finished and there is progress in advice, there is still a long way to go to put the business on a profitable footing. Given slightly reduced, but still considerable, uncertainty we retain Total Return on $10,000 Investment our Neutral/High Risk call and A$1.25 target price. For more information see full research report 13 Aug 2021.

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Profit & Loss ($M) Cash Flow ($M) 2016A 2017A 2018A 2019A 2020A 2016A 2017A 2018A 2019A 2020A Net Earned Premiums 2,640 2,362 1,664 1,211 -- Premiums Received 19,072 18,067 14,871 13,384 8,428 Claims Expense -1,888 -1,812 -1,767 -1,663 -- Outward Reinsurance Paid ------Underwriting Profit -1,162 -1,366 -2,003 -2,235 -1,139 Claims Paid ------Investment Income 8,567 11,888 1,854 17,835 753 Reinsurance Received ------Unrealised Gains ------Net Operating Cashflow 175 -1,398 -3,981 -9,109 -2,742 Profit Before Tax 1,188 1,748 -302 644 22 Acquisitions & Investments -- -293 -113 99 2,341 Income Tax -166 -763 417 -740 19 Sale of Invest. & Subsid. 1,463 -2,614 4,355 8,104 956 Outside Equity Int. -536 -25 -23 -33 -17 Net Investing Cashflow 1,452 -2,953 4,205 8,148 3,214 Profit after Tax 486 960 92 -129 24 Proceeds from Issues ------766 -- Significant Items after Tax -830 -112 -64 -2,338 29 Dividends Paid -821 -828 -708 -117 -360 Reported Profit after Tax -344 848 28 -2,467 177 Net Financing Cashflow 577 2,771 -77 1,759 -1,988 Preference Dividends ------Net Increase Cash 2,204 -1,580 147 798 -1,516 Cash at Beginning 6,601 8,810 7,222 7,382 8,069 Exchange Rate Adjust. 5 -8 13 2 -4 Cash at End 8,810 7,222 7,382 8,182 6,549

Ratios and Substantial Shareholders Balance Sheet ($M) 2016A 2017A 2018A 2019A 2020A 2016A 2017A 2018A 2019A 2020A Profitability Ratios Cash & Equivalent 3,476 3,602 3,932 4,539 2,428 Claims Ratio % 71.52 76.71 106.19 137.32 -- Receivables 1,857 2,103 2,603 2,580 651 Expense Ratio % 72.50 81.12 114.18 147.23 -- Investments ------Combined Ratio % 144.02 157.83 220.37 284.56 -- Other Current Assets 147 145 314 540 233 Return on Equity % 6.44 13.18 1.35 -2.59 0.56 Current Assets 5,480 5,850 6,849 7,659 3,312 Receivables 17,868 20,252 21,176 21,889 20,577 Safety Ratios Investments 111,596 116,912 112,015 113,956 6,160 Solvency Ratio % 279.66 301.48 395.37 391.58 -- PP&E 66 75 95 343 264 Other (inc Intangibles) 5,050 4,996 5,143 3,837 1,851 Top 5 Substantial Shareholders Non-Current Assets 134,580 142,235 138,429 140,025 28,852 Allan Gray Australia Pty Ltd 6.6% Total Assets 140,060 148,085 145,278 147,684 32,164 The Vanguard Group,Inc 6.0% Trade Creditors 1,840 1,635 1,908 2,332 288 BlackRock, Inc 5.1% Unearned Premiums ------Outstanding Claims ------Borrowings 13,127 13,844 15,412 17,023 23,222 Provisions 531 549 1,196 1,494 1,483 Other 92 -- -- 170 127 Total Liabilities 15,590 16,028 18,516 21,019 25,120 Unearned Premiums ------Outstanding Claims 24,225 23,683 23,257 23,505 -- Borrowings 5,241 7,654 7,627 6,975 2,281 Provisions 1,946 2,190 1,633 2,492 229 Other (inc Creditors) 85,517 91,247 87,454 88,715 252 Non-Current Liabilities 116,929 124,774 119,971 121,687 2,762 Net Assets 7,541 7,283 6,791 4,978 4,282

Current Analyst Recommendations * Principals & Directors Principals Company Secretary Ms Marissa Bendyk Directors Ms Alexis Ann George(Chief Executive Officer,Executive Director) Mr John Kevin O'Sullivan(Non-Executive Director) Ms Debra Hazelton(Non-Executive Director,Non-Executive Chairman) Mr Michael (Mike) John Hirst(Non-Executive Director) Mrs Andrea Elizabeth Slattery(Non-Executive Director) Ms Kathryn (Kate) Mary McKenzie(Non-Executive Director) Mr Rahoul Chowdry(Non-Executive Director) Mr Michael Sammells(Non-Executive Director)

* Source: Morningstar. This chart shows the spread of recommendations from those broker analyst's in Australia with research coverage of this stock.

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Operations Pty Ltd ACN 004 523 782.

Bell Potter Securities Research Email [email protected] AFS Licence No. 243480 ABN 25 006 390 772 Website www.bellpotter.com.au