AMP's new strategy looks to China and high growth businesses

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AMP, the Australian financial services giant hit by a crunch in the insurance industry, today unveiled a new strategy designed to put it on top of the heap again.

The plan to turnaround AMP’s overall poor financial performance was launched at an investor strategy day in Sydney.

AMP says the strategy will direct investment to higher-growth businesses in wealth management such as services for self managed superannuation, and AMP Bank and the successful AMP Capital.

The plan will also leverage AMP’s strengths in overseas markets, including riding a wave of high growth in China, and maintaining focus on costs.

“Our strategy continues AMP’s shift from a product and distribution business to a customer-led organisation focused on helping our customers achieve their personal goals,” says CEO Craig Meller.

“We are uniquely positioned to benefit from favourable domestic and global thematics including the mandated growth of the Australian superannuation system, a growing banking market and the structural increase in demand for investment yield as the world’s population ages.”

In Australia, the wealth management business will drive greater revenue from advice and self-managed super fund (SMSF) services. AMP expects 1% growth in assets under management coming from SMSF.

The strategy in one slide:

Source: AMP

The company wants to double the value of AMP Bank over five years.

From China, AMP is targeting earnings of $50 million a year from the China business, via pensions and asset management, within five years.

International expansion will include Europe and the US.

AMP in February posted a full year loss of $344 million, a 135% drop on the $972 million profit of the year before, as its wealth protection insurance business runs down. Revenue was up 5% to $14.799 billion.

That substandard result was for senior executives to lose a combined $34.3 million in short term bonuses.

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