AMP Limited (AMP) Earnings Call Transcript

Good day and thank you for standing by. Welcome to AMP Half Year 2025 Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chief Executive Officer, Alexis George. Please go ahead.

Yes. Thank you very much, and I'm very glad to have you all join us so soon after our Investor Day to deliver our first half '25 results. Before commencing today, let me acknowledge the Traditional Custodians of the land on which we're holding this meeting, which for us, of course, is the Gadigal people of the Eora Nation, and I'd like to pay my respects to the Elders past and present. Of course, with me today, I also have our CFO, Blair Vernon, who will talk later. So if we just go through the order of proceedings for today, I'll firstly just do a quick overview of the first half '25, and then Blair will deep dive into our financial results, including in each of our business operating units. And then we'll do a focus particularly on cost, capital, our guidance for the remainder of the year before we give a quick wrap-up on what our priorities will be for the second half. So as we come to the first half '24 highlights, I think about this as a continuation of just delivering on our promises every single time. The group NPAT is up over 9% to $131 million as we continue to drive cash flows in our wealth businesses while remaining focused on efficiency and removing those stranded costs from the transactions we've undertaken. Controllable costs continue to decrease. And I'll remind you, at the same time as doing this, we're absorbing inflation of over 3%. EPS is improving and has improved 18% in the half, both positively impacted by the operating performances of the businesses, but also by the share buyback through the capital return. And today, we announced an interim dividend as promised of $0.02 per share franked 20%. On top of the financial results, we've also launched Lifetime solutions across our Master Fund options, launched AMP Bank GO and continue to prudently manage loan growth for margin, not volume. So let's just quickly reflect on the portfolio AMP has today. By now, I'm sure you're all familiar with our operating units, the Platforms, Super and Investments, where we spent a lot of time a couple of weeks ago deep diving into the way we're driving those businesses. Of course, we also have AMP Bank, which consists of our Heritage as well as our new AMP Bank GO digital offering and the New Zealand Wealth Management business. We still do have exposure to a number of partnerships that continue to deliver both growth and dividends. If I look at our China assets, the payout ratios on dividends have increased for both our CLPC and our CLAMP offering. And you may recall that we've been talking about this for some time. The businesses grow, but we wanted to focus on increasing dividends. And CLPC increased from 30% to 35% payout and CLAMP paid a special and almost commenced dividends this period of 40%. We expect dividends will continue, but maybe not at that higher level. And of course, PCCP continues to deliver in line with its actual performance. So let's just go a bit deeper on each of the business units and the execution through the first half before we get into the numbers. In Platforms, we went into detail on Investor Day, but I think it's important to remember that we do continue to innovate in retirement. We're not just talking about it. We're actually executing on it and we're now working on the next phases of those innovations. We are growing fast in managed portfolios, but we have a robust process around management of that. We're driving AI to improve adviser efficiency and we're really focusing on that sales capability and I was pleased to announce the new appointments just a couple of weeks ago. In S&I, our Lifetime solutions is now being delivered for 140,000 customers and is growing. Returns, service, reputation are all at strong levels. We've launched Digital Advice and we continue to add new modules to that every single quarter to ensure that we can meet our customers' needs and help drive that financial well-being. And in the next few days, we'll be delivering Citro, our rewards program to members in the AMP business. In New Zealand Wealth Management, it'd be fair to say that it's a very difficult economy in which they're operating. However, our diversified income through Advice, KiwiSaver and General Insurance does provide us some protection across the income base. And our bank is focused and continues to be focused on margin over volume whilst looking for those niche opportunities such as the self-employed area. We also launched our 10-year interest-only to support the proposition about AMP being an expert in retirement. And of course, we just recently introduced our new broker interface to streamline processes and I've been very pleased to see the feedback from brokers that we've been receiving. And on top of that work, we launched AMP GO on time, on budget, our new digital offering to both individual and mini businesses. And just to reflect on what we've done over the last 6 months, I want to remind you back in November '23, we said we would launch this in the first quarter of '25, and we did that. In February, we introduced personal and mini business transaction accounts. In April, we were first to bring Qantas Frequent Flyer to transaction account balances. In June, a simple business overdraft, in July, savings accounts for both personal and businesses and we also brought in Live Pay for businesses. And over the rest of the year, we'll introduce joint accounts, further developments for overdrafts and term deposits. I think this demonstrates that we can execute when we put our minds to things. And on top of that, AMP GO has really helped facilitate the cultural change that we're bringing across AMP. So on that note, Blair, please let us go to the financials.

Thanks, Lex, and good morning, everyone. As Lex has outlined, underlying NPAT for 1H '25 is up over 9% to $131 million in the half. Total revenue increased to $632 million for the half. And importantly, our controllable costs fell by over 4% to $303 million for the half, delivering an EBIT improvement of some 14% over 1H '24. Earnings per share increased over 18% off the back of these improved metrics. And similarly, cost to income improved almost 3% to 59.4% in the half on the basis of our measurement. ROE also improved at a group level to 7.4%. Statutory profit is down slightly half-on-half at $98 million. Breaking out the details of underlying and stat profit, we did absorb an increase in litigation and remediation-related costs during 1H '25, reflecting the further mobilization of our response to class actions. Secondly, our business simplification program continues as planned with $21 million of post-tax expense in the half, broadly consistent with our prior periods and within our anticipated total envelope of spend across this program of up to $150 million pretax. Following on from our Q2 cash flow announcement on July 21, our 1H '25 AUM reconciliation shows the positive improvements across all 3 Wealth Management businesses. Platforms AUM up over 11% in the half to $83.2 billion, with margin holding steady at 43 basis points. Superannuation and Investments AUM grew over 8% to close the half at $58.5 billion, including a return to positive cash flow in Q2, as previously discussed. Margin for the half was just marginally down at 62 basis points. In New Zealand, AUM increased by 9.6% to $12.2 billion, driven predominantly by market movements with some modest margin compression, albeit from a structurally higher start point in New Zealand compared to our Australian businesses. Looking at the overall group reporting units now at a high level. Platforms NPAT increases to $58 million for the half, up 7.4% off the back of significant AUM growth. Superannuation and Investments NPAT is flat in 1H '25 compared to the prior corresponding period. AMP Bank NPAT of $36 million is a modest improvement, reflecting our careful management of volume and margin. New Zealand NPAT is up almost 12% in the period to $19 million, a solid result built off diversified revenue streams. Finally, our group reporting unit improved to a loss of $16 million for the half as we continue to remove stranded costs as planned. Now looking at the business units in a little more detail. Platforms AUM revenue was up slightly to $172 million for the half, with other revenue and investment income stable half-on-half. Costs overall are slightly down, reflecting savings from our continued corporate center cost-out initiatives, creating an envelope to continue our ongoing investment in the North business. North Guarantee continued a positive contribution in 1H '25 and our managed portfolio growth continues to be another highlight, as Lex mentioned, up 14% in the half to $21.8 billion. Margin for the half at 43 basis points is consistent with guidance. And while down compared to 1H '24, pleasingly, it is flat when compared to our closing margin of 43 basis points for FY '24. Looking at Platforms margin in more detail, where the flat margin compared to 2H '24 is evident in the bar graph on the slide and the mix between admin and other fees also remains broadly stable. The composition of Platform AUM has only changed marginally in 1H '25 in terms of the mix between managed portfolios and AMP managed funds products on the platform. However, pleasingly, the mix of AUM that generates investment-related fees remained steady at 56% of total AUM on the platform. Platform cash flows were discussed extensively at our recent Investor Day, again, as Lex mentioned. However, I think it's worth reiterating a couple of key points. Net cash flows in 1H '25 continue a solid half-on-half outcome in line with our strategic intent. Similarly, the composition of advisers using North also continues to improve with 2,213 advisers now having AUM of greater than $1 million on the platform, up 25% in the half. Pleasingly, the cash flow performance from those advisers continues to improve through 1H '25 relative to lower volume advisers as shown in the bar chart on the bottom right of the slide. In our Superannuation and Investments business, NPAT for the half was flat at $34 million. AUM-based revenue was up over 4% to $175 million in the half, a combination of improved average AUM, offset by slightly lower margin when compared to 1H '24. Other revenue and investment income is down compared to 1H '24. This is mostly a function of positive one-offs experienced in the 1H '24 period not repeating this half. Controllable costs fell slightly in the half. However, variable costs were up in the period, tracking the rise in AUM. Notably, [ IME ] remained steady at 15 basis points. Net cash flows continue to improve, reflecting a range of positive actions from the management team, including a top quartile investment return for our diversified options in the financial year ending 30 June 2025. Margin across the S&I business is down slightly at 62 basis points in 1H '25, which predominantly reflects the impact of fixed member fees and fee caps and the outworking of market movements positively impacting individual member balances. We are actively reviewing the construct of fees across the S&I product range to ensure we are positioned to manage margin dynamics as we look into FY '26. Our guidance of margins at circa 63 basis points for the year remains, given the subtlety of these mix and volume characteristics, albeit this will remain a critical focus for us in 2H '25 as we continue to target growth in this key business. That growth is best shown in the improvement in cash flows half-on-half with a significant improvement seen in 1H '25 as profiled at our recent Investor Day. Our clear focus on member retention is paying dividends and our renewed investment in this business to deliver new features and benefits to members will see further enhancements rolled out in the coming half, as Lex mentioned earlier. NPAT for AMP Bank is up slightly in the half to $36 million, mostly influenced by positive growth in income, offset by some cost increases. NIM grew 2 basis points when compared to 1H '24. Our mortgage book grew below system, reflecting our disciplined approach to the volume margin trade-off in the asset side of our business. Deposits also fell slightly, again, reflecting our granular approach to margin and volume management. Variable and controllable costs collectively grew by $5 million pretax in the half. This is entirely as a result of absorbing the initial operating and resource costs from the go-live of AMP Bank GO, which accounted for an aggregate of $6 million pretax in the half. Return on capital was up 40 basis points in the half, reflecting our improved operating metrics in the bank. Briefly turning to net interest margin, which improved more significantly when comparing to 2H '24 with a total 6 basis point improvement. Roughly half of that improvement emerged in the lending book, mainly as an outworking of fixed to variable rollovers. On the funding side of our book, margin improvement was weighted towards our retail deposit business as we carefully manage term deposit maturities in particular. In line with our strategy, 1H '25 saw the continued growth of investor loans as compared to owner-occupier with a relatively stable mix of interest-only compared to P&I loans. Arrears increased modestly in 1H '25 compared to the December metrics, reflecting the ongoing mortgage pressure that a small number of our clients are experiencing. This remains an area of key management focus, albeit our existing weighted average LVR metrics, as shown on the slide, suggests most clients have significant headroom in their facilities. Equally, bad debts and loan impairment expenses both continue to be negligible relative to our book size. Turning to New Zealand, which delivered another strong result with profit up almost 12% in the half. Controllable costs remained flat compared to 1H '24 and continues the trend of our New Zealand business absorbing significant inflation in that local market over many years. Net cash flows, excluding pension payments were up in the half as is average AUM. This represents a positive outcome when considering the difficult market conditions in New Zealand, where unemployment has now risen to 5.2% and KiwiSaver hardship withdrawals are up 26% across the market. NPAT underlying in our group unit improved 20% to a reported loss of $16 million. Our partnerships in China delivered a strong result, up 35% on 1H '24 at $27 million. Conversely, our other partnerships reduced by $7 million, predominantly as a result of property valuations in the PCCP fund and FX movements. Collectively, this saw the partnerships contribution to our results steady half-on-half at $37 million. Other revenue fell to $4 million in the half, which reflects the reduced contribution from the residual advice assets that were not part of the sale perimeter in our advice transaction, which we announced at this time last year. Interest expense on corporate debt is broadly steady half-on-half as a result of average debt balance and interest rate mix being higher overall. As previously noted, controllable costs at a group level continue to fall as we harvest stranded costs in line with our guidance. As I just mentioned, our joint venture partnerships in China continue to make a growing contribution to the overall group. China Life Pension Company with an equity accounted carrying value of $525 million in 1H '25 is the larger of these 2 joint ventures and has achieved a preeminent position in the pension market in China. This has built off its market-leading position in the Pillar 2 enterprise annuity segment and now its rapidly growing success in the recently launched Pillar 3 or individual segment. AUM was up 21% in FY '24 to the equivalent of AUD 441 billion, which underscores the scale opportunity in the Chinese pension market. Dividends from CLPC in FY '24 have increased with a 35% payout ratio, reflecting the continued success of CLPC. China Life AMP Asset Management Company with a carrying value of $103 million at the half also enjoyed significant AUM growth in FY '24, up 27% to the equivalent of AUD 89 billion. Pleasingly, as Lex mentioned, the first significant dividend was paid from CLAMP in 2024, representing a 40% payout ratio of distributable net profit. Now turning to costs. Controllable costs in 1H '25 at $303 million represents a 4.4% reduction in absolute terms, having absorbed continued inflation pressure across most of our expense lines. Employment costs experienced that inflationary pressure more significantly. And in addition, the resourcing of AMP Bank GO also contributed $2 million to the increase in this line. FY '24 employment costs in total also had some timing differences, which contribute to the historically better H1 to H2 performance in prior years of our reporting. We expect that to be neutralized this year and this also contributes to some noise on those half-on-half comparisons. Also noteworthy is our continued shift to a better mix of permanent staff compared to consultants, which makes for a mix change across employee costs compared to professional services. Pleasingly, we saw continued reduction across the rest of our expense categories, which demonstrates the discipline and rigor of our cost improvement initiatives. Technology cost saves continue and also include the continued acceleration of our investment in AI to further future-proof our technology and digital capability. Now to capital. Following on from our restatement of capital and liquidity in FY '24, we summarize on this slide our 1H '25 capital position. Group CET1 surplus capital has increased to $211 million, benefiting from statutory profit in the half of a net $98 million, offset by the FY '24 final dividend and net business activity. Business activity in the half absorbed $39 million of capital. However, this was offset by the realization of $40 million of net deferred tax assets, delivering the virtually flat net business activity impact in the half. The 1H '25 interim dividend announced today will naturally reduce the surplus capital by a further $51 million as we enter 2H '25. Group cash remains slightly higher than our target level, but this is expected to trend down in coming periods as we continue to optimize the group liquidity position. Finally, updating our FY '25 guidance, subject to market conditions as usual. We maintain our guidance on margins of circa 43 basis points for Platforms and circa 63 basis points for Superannuation and Investments as we look at the full year. In contrast, we revised slightly our FY '25 NIM for AMP Bank, which we now expect to be broadly in line with the 1H '25 result at circa 1.3%. Controllable costs are expected to be $600 million, in line with our market commitment and guidance. This will include the initial AMP Bank GO operational costs, reflecting ongoing cost-out momentum in our underlying business. Our business simplification program continues to deliver results and is now expected to conclude slightly later than anticipated but remains within our guided investment envelope of $150 million pretax. This timing change reflects our careful approach to this program of work and ensuring that we get maximum value from every dollar spent. Our partnerships performance guidance remains unchanged. I'll now hand back to Lex.

Thank you. And so if we look forward to the second half, the priorities are consistent. We want to continue to drive that improvement quarter-on-quarter for our wealth flows by focusing on innovating in retirement, utilizing AI for advisers to improve their customer service, but also for our own efficiency and of course, improving retention in our S&I book. Secondly, we're focused on scaling AMP Bank GO while continuing to look for lending in those niche opportunities to improve the margin. We will deliver on the '25 cost promise and look to maintain CTI competitiveness through the years into the future. And fourthly, we want to continue to support the partnerships and look for the opportunity, as we've talked about, to exit the PCCP relationship in the future. So I think when we look at AMP, we're delivering on our promises. We've returned the capital and that's starting to show in the EPS growth. We're delivering on our cost promises. We're not just talking, but we're delivering on innovation in retirement and we're delivering growth and really gaining momentum across our wealth businesses. I think we're at the point where we're in a strong position to really capitalize on the very hard work of many years. So with that, thank you very much for listening today, and I'll pass over to you, Maggie, for questions.

[Operator Instructions] Our first question comes from the line of Julian Braganza from Goldman Sachs.

Just the first one in terms of the China partnerships. You talked a little bit about there just in terms of the favorable macro backdrop supporting trends in those businesses. Can you maybe just give us a little bit of color in terms of how you're thinking about just the earnings growth and what it means just in terms of earnings going forward, please?

Yes. Yes. Thanks for that question. I think if we look at the China environment, despite what may be happening economically, the government has been really supportive of the pension reform there. Heard Blair talk about the Pillar 3, where they've introduced some tax advantages encouraging individuals to contribute voluntarily. So I don't really see much of a change in the trends there and the growth are just phenomenal from an Australian perspective anyway. So we're expecting that to be 10% through the cycle. And that's particularly in the pension company, which has got a predominant position across most of China. I think in the asset management area, it's a little more challenged. You've got a lot of global participants there, but it's very much the smaller of the 2 partnerships. So I think in terms of FUM, we'll see continued asset growth. How does that drop through to profitability? At this point, we've seen continued improvement in profitability through the cycle. That's great, but we also want to see the payout ratios and dividends, which is why you've heard both Blair and I call that out today because at the end of the day, that's cash in our bank account. And it was very pleasing this half to see uplift in CLPC and certainly our first significant dividend for CLAMP.

Got it. Maybe just shifting to the bank, just in terms of the NIM that you printed there. So clearly very strong in the first half, which bodes well going into the second half. Can I just understand, given that trajectory and the trend in the NIM, particularly from second half '24 to first half '25, why is it that for the full year, you've kind of maintained at 1.3%? Are you not expecting some of these benefits to persist? Just how should we be thinking about that second half NIM given you're now calling for kind of flattish NIM between first half '25, second half '25 despite the strong improvement?

Yes. Thank you for that question. I'll ask Blair to talk to that. I think one thing is really important to know for at least our Heritage Bank is we don't have a lot of transaction accounts. So we don't have a lot of money that has -- is at [ 0% ] interest rate or close to 0%. So for us, it's quite a different dynamic to most of the other banks in the environment. And certainly, as markets change, as rates change, we have some opportunities there. But Blair?

Yes. Great question, Julian. Look, a couple of things that occurred in the first half that I think have helped us as I commented, we saw the sort of, I guess, the final tail of fixed or variable rollovers. There's virtually no fixed in the book. So we don't see that benefit repeating. And similarly, the fine-tuning and really granular work that we've been able to do on term deposit maturities and being very thoughtful about the competitive dynamic did deliver some benefits in the first half. But as you saw in our sort of aggregate numbers, we did see a bit of a fall in deposit volumes. We can't continue to see that fall away because obviously, the overall funding, which is really critical. So our view on TDs and deposits generally is the market certainly remains super competitive and we're going to need to continue to compete in that space. So we're just cautious about that dynamic as we look in the second half.

Got it. That's clear. And then maybe just on the F&I business, just the margin there as well. retaining the full year despite second 62% for the first half, implying a little bit of an increase in the second half from what's suggested. Maybe just that and also just medium term, you flagged a few changes there to attract growth. Just how you're thinking about the margins for that business in the medium term?

Yes. Yes. Look, it's a good call out. Obviously, margin was slightly below anticipation, although I think broadly in line with that sort of circa 63 basis points. The reason we've kept with that guidance is that as I mentioned in the presentation, there's quite a complicated mix of dynamics there. And to some extent, the margin compression we've seen in first half is a result of AUM growth overall in the book. And so we see individual client balances growing. That's where that fee cap issue sort of emerges more. And so if markets are steady or if there was any decline, we would actually see some benefit back to margin. So it's quite an interesting balance. The other thing that -- so I guess the reality is when we look at that, that bit of margin movement is a result of AUM growth, not any reduction in pricing or changing of rate cards. I do think we need to closely examine that fee cap and fee structure mechanism to address that. And so that's why I've called that out. It's something the management team are working on. And so that will be a key focus for us as we look into FY '26 as well.

Got it. And just one last question. This is on the capital management. We should have seen some benefits come through on the change in the operational risk charge for the platform business. There should be further benefits coming through as well. You have the DTA, you flagged sale -- potential sale of PCCP, potentially an earn-out as well on the sale of the AMP Capital business, Collimate Capital. Just how are you thinking about capital now and just given some of these benefits that are starting to emerge, how should we be thinking about it?

Yes, it's an interesting question. And clearly, there's some positives on the horizon. I'd like to think and you've just mentioned a few of those. And clearly, we're in a strong capital position at the half. We did have the class action that we've just been running through over the last couple of months. And so that was a negative that we were worried about, but clearly hasn't eventuated yet. And I want to stress, we'll continue to fight that hard, but it hasn't gone away. Those near-term negatives haven't gone away yet and we are back in court on that class action in October. So yes, I think there's positives coming through, but also we've got some still uncertainties arising there. Clearly, we're not in the business of hoarding capital. So I don't want to do that. It drags on our returns, as you well know. So over the next few months into the full year, we'll be having a really good look at that capital and seeing where we're at on the various uncertainties that lie in the future, both positive and negative.

Next, we have Nigel Pittaway from Citi.

Just first of all, just maybe honing in just a little bit more on the S&I margin. I mean if markets do remain flat, are there any other factors pushing that margin up? Or is it really just the fee caps that's the main factor there?

There are -- I mean, obviously, the customer mix is also relevant, Nigel. If -- the impact of retention has been great because that's mean we're retaining higher balance customers. The fee caps for those customers mean they're obviously proportionately paying less. As we anticipate growth in that business, as we onboard ideally more new clients, that will have an impact in terms of the overall margin mix as well because conversely, those clients onboarded typically have lower balances and therefore, the fee caps work the other way. So I think that shift as we're now seeing those early stages of growth in S&I and ideally, that shift from continued retention, but also now moving into growth, that's a factor that we think gives us some opportunities.

Okay. So you don't need markets to fall for you to achieve your guidance -- margin guidance in S&I. That's basically the conclusion. Yes.

We want to continue to grow that new customer base, Nigel. That's absolutely our focus right now. And I think the recent launch of the Lifetime solutions is part of that, but we're also doing quite a bit of marketing at the moment.

Okay. And then maybe just on the controllable costs. I mean, obviously, you did sort of touch a little bit on this that there wasn't sort of normal seasonal factors pushing down first half. But obviously, to hit the cost guidance, you will have to reverse that usual second half versus first half seasonal skew you get on the costs. Can you just maybe expand on that as to why you think that's the normal seasonal skew that we see in the controllable cost base isn't going to appear this year?

Yes, I can, Nigel, but I want to be really explicit that we will meet our controllable cost guidelines. I just want to say that upfront. And when you have a look at the waterfall, you can see that it is in employee cost. And part of that is fixed, but part of that's variable. So it's kind of one-off change as a result of the variable rent being allocated and hitting the first half of the year. And that's a result of us performing better. So I'm very confident as a result of that, that we're going to hit that second half and bring it back down to the $600 million.

Okay. All right. And then you did sort of suggest that group cash was likely to decrease. You said as you're optimizing group liquidity. I mean you are holding a fair bit of cash of $800 million. Can you maybe just explain a bit more about the philosophy behind that and how you expect that to track down moving forward?

Yes. Briefly, I mean, obviously, we've had that sort of elevated cash position for a little while, and that's been a result of our positioning around any anticipated outflows that there might have been across some of those negative elements that Lex talked to. Obviously, those haven't eventuated. And we've continued to free up cash resources across the business and obviously naturally benefits from that continued momentum around cost save, which is now really baking in. So as we've seen that position become more certain, we're now much more confident about fine-tuning that. That will include near-term activities like, as we noted in the slide there, the group credit facilities, which are undrawn, and we'll roll those off in short order as we trim both the cash, but also any other facilities in place.

Great. And maybe just finally, I mean, the digital bank seems to have started pretty well, but it is notable that the skew is more personal than the SME you're originally targeting. Is that sort of an ongoing thing? Or is that just because you need to launch more of a target with the SME? How are you thinking about that?

Yes. I think that's a fair observation for where we are now, Nigel. I just think it's important to remember, we actually only launched most of the package that was focused on businesses through July, which included the overdraft and the Live Pay. So I'm not surprised that those are the numbers that we're seeing right now. With the launch of that though and with the above-the-line marketing campaign that just started last week, and hopefully, there's a bus been seen by you somewhere, we will expect to see those changing dynamics during the second half. But it's pretty much what I would have expected given the solutions we had available for the first half.

Next, we have Andrei Stadnik from MS.

Can I ask my first question around margins in the platform business? So it was pleasing to see those margins remain steady. But can you explain a little bit about the different moving parts in terms of the composition? Because you called out that investment component or sorry, the fee-paying component at 56% of AUM that generates investment-related fees. You called that out as being steady and be helpful. If we look back to what happened in FY '24, that 56% actually increased by 4 percentage points during FY '24 and yet margins overall fell quite clearly. So can you explain a little bit just what are some of the different dynamics that are happening in terms of the platform margin? And how should we think about any mix shift going forward?

Yes, it's a really good question. And as you sort of recognize that the margin dynamics are pretty complicated in that business. Just briefly on the split between sort of what we call AMP managed funds and managed portfolios. The growth in managed portfolios has clearly been very aggressive over the last couple of years. And in the early stages, a lot of that managed portfolio growth did not include necessarily material impact of -- or material composition of any AMP managed funds. And actually, some of that growth was actually straight out of those managed funds. So there was some sort of churn and mix dynamics more early that we're now seeing more moderated. And so a combination of managed funds a little more stable and some of those managed fund products and components inside the managed portfolios means we're seeing some mix dynamics that change. So our -- yes, hence, you see that more stable margin. I'm not for a moment stressing that's not a constant focus for us and we're very sensitive to the fact that there's a lot of competitive pressure out there and that, that margin is a key focus for us. But we're pleased to see some stability in the first half relative to certainly first half last year where there was some compression.

So is like a key figure to watch here for investors because a lot of moving parts. But is that a key figure to watch here? Is it a 56% versus 44% split? Or what would be a simplified way to think about this?

Yes, I wouldn't want to try and boil down to one simple number, the margin sort of dynamics of platforms. There's clearly a lot of levers that operate across the platform market. I think -- I mean, frankly, the one number I look at is overall volume growth and is that volume growth that we're seeing not occurring as a consequence of margin compression. I think the first half demonstrates we've been able to deliver volume growth through the business and stable. So I'm focused on volume growth, first and foremost, and margin stability. In terms of margin composition, as I say, I think the managed portfolio and managed funds mix is a key one. If that was to move substantially, then you would potentially see some change. But certainly, at the present point in time, based on what we're seeing come through week-on-week, we've got confidence that the 43% is, circa 43% is valid for this year.

I mean I think that's a fair question to ask and that's why we put the balance of the portfolios there because if we found that -- we're in a unique position that we have an investment manager in AMP as well. So we're not just an admin provider here. We've got those 2 components. And I think the benefit we have started to see significant improvement in the returns that the AMP investor -- investment management capability has been delivering, which is why Blair is saying we're now starting to be in some of the managed portfolios as well as [ NRR ] and direct managed. And so if we started to see our returns fall back again, I would be worried about that because we'll start to be deselected from managed portfolios. So I think watching our returns as an investment manager is really key.

And look, for my second question, I'm just giving it to 2. Just I want to ask around the volume growth because just coming back to, I think, the chat we were having earlier as well in the mini Investor Day in Platforms and Super Investments, the flows have been stronger. And I think you almost implied you still expect to see quarter-on-quarter growth from here. So what are some of the features you're seeing in terms of lead indicators on flows? What are some of the BDM activity investments you're making? Like what additional color can you provide here?

Well, I think for us, if you look at that slide in the pack where we talk about the number of advisers who are supporting North, that is the most critical thing for me. The number of active advisers, which we define as those with $1 million of -- over $1 million of FUM who are actively supporting us. And at the moment, that's 2,200, but you'll see that we've got a growing number of positive cash flow advisers. So for me, it's continuing to focus on improving that number. Now why is that number improving? There's a couple of things. Firstly, we've been able to maintain support from our ex-AMP advisers and that is really critical for us. because while they are part of the group, obviously, they had greater connectivity to us, but we've been able to maintain that connectivity and support while they're outside the group. And in fact, we've even seen some slight improvement since they've been outside the group. So that is number one. The second one is we are starting to bring new advisers onto the platform. And that's a combination of several things. Firstly, and you heard me talk about it, we've been rebuilding sales capability that we kind of lost in the period of time when we spent a lot more time internally thinking about things. So that's one. And the second one, we have continued to innovate in that space. We've bought in Lifetime solutions, accumulation and pensions. We really are driving AI improvements there that can help the advisers with the customers. We've got one of the best rated apps available to customers that advisers can use. So I think it's a combination of actually innovating, driving service, but also building that sales capability and getting the message out to new advisers. But I would certainly be looking at those adviser numbers that we've kind of highlighted on Page 17.

Next, we have Siddharth Parameswaran from JPMorgan.

A few questions, if I can. I just wanted to clarify the outlook for the China investments. Just half-on-half, the partnerships didn't have any growth in contributions for revenues. I just wanted to make sure I understand exactly what's happening there, Alexis. I mean you showed charts which showed very strong growth in AUM. I think you said that margins were also holding up in those businesses in terms of earnings, but you're also flagging that the dividend payout ratios are flat to increasing. I'm just keen to make sure I understand whether there's any seasonality half-on-half or whether there's -- like should we be expecting this number to grow 10% in a linear fashion? How should we be thinking about this going forward? And why is it flat half-on-half?

Yes. If I may, when you look at the partnerships, I think it's really important to remember that we have China partnerships and we've kind of highlighted them in a bit more detail this time, a, to show the FUM growth, but b, to show the changing dividend profile. But on top of that, we have other partnerships as well. The main one we talk about is the PCCP joint venture, which is a real estate fund in the U.S., but we've also got some other things there like some sponsor investments in underlying funds, including some sponsor investments in some PCCP funds along with some other less material ones. So when you break down the partnerships, the China ones have, in fact, half-on-half grown over 30% actually. And the other partnerships is where the decline occurred. And that's been in one of those underlying investments, not in the joint venture and it's a result of some of the real estate assets in the U.S. being revalued. So I just think it's important to look at the 2. The joint venture investment in the U.S. is still doing quite well. It's really hard to predict what the future might look like in terms of those partnerships. But I think as we said in here, the growth has been around that 10% through the cycle. And to date, a lot of that has dropped through to the bottom line.

Sorry, Alexis, my question was -- so if I look at your data pack, I think it's -- when I look at the group -- half-on-half, it seems flat for the China partnerships, 27%, 27%?

It's probably due to the payment of the dividend. Is that what you think?

Yes. If I just clarify that, the -- you're right, and you're comparing -- in our main presentation, we're comparing the 1H and 1H.

Sorry, I didn't…

Second half '24, yes, it's flat. There is some volatility half-on-half in the way that China performance gets reported. And so -- but overall, we would expect continued performance. You can see, if I look at 1 half or 1H '24, that's certainly we're seeing that improvement.

It's probably just some one-offs in the finalization of their accounts as opposed to actual trends.

So I mean -- so I just want to be clear because we can't see NPAT, we see dividends. Is the profitability increasing in line with the AUM that you show in that other chart? Just hoping you could help us with some visibility because I suppose we can't match all the numbers together.