AMP Bank may have a future after all
(Australia) - With three chief executives in two years and A$157.5 million in accumulated losses since 1998, AMP Bank has been an easy target - but amid the parent company's current turmoil are some signs that the much maligned unit may have a future after all.
AMP Bank's A$46 million loss for the 2001 full year also attracted much criticism, partly for the way the company went about disclosing it.
The fact that the bank had made a A$5 million profit on its Australasian operations was the figure which was publicised, but the cost of relocating the NZ head office to Sydney and an A$18 million loss on its UK banking platform, launched in June 2000, pushed the unit into the red once more.
In AMP's most recent half-yearly result, the bank posted a A$4 million profit in Australasia, but - in what is becoming a familiar story for AMP - the UK operation lost A$7 million for the unit to once again be a drag on the company's bottom line.
But amid the flowing red ink are signs that there is now the core of a sustainable business, in Australia at least, where AMP Bank vies with ING Direct as the fastest-growing deposit taker in the retail market. Analysts have stopped - for the time being - talking about when AMP Bank would either be closed or sold.
It's not simply because there are problems elsewhere in the AMP empire, but because a trawl through AMP Bank's results throws up some figures which give cause for some optimism.
In amongst all the headlines about Pearl and Paul Batchelor's resignation, Standard and Poor's has put AMP Bank on credit watch with positive implications.
From start-up in March 1998, AMP Bank has assets of around A$8 billion and 350,000 customers. Operating income for the 2001 financial year was A$106 million.
When put against total expenses of A$171 million, that may not look very imposing, but AMP should be able to cut back many of those costs as the business goes forward. The deal to outsource credit card processing to Certegy, for example, is likely to drive some costs out of the business.
In NZ, one-off restructuring costs from the move back to Sydney, and the loss of 150 jobs, dragged the result down by around A$15 million.
Also, the profitable GIO Building Society, which is in the process of being integrated into the AMP Bank entity, is still quarantined from the AMP Bank balance sheet. That integration should have been completed by the time AMP next reports full year results, and should have a positive impact.
Start-up costs in the UK are also dissipating, and AMP has said the bank is meeting its targets there.
In March, Craig Meller was appointed head of AMP Bank, coming to the Sydney-based job from the UK where he had been managing director of Ample, AMP's online financial services product launched in June 2001.
The assessment of Meller is that he has particular expertise in distribution and leveraging online platforms, which would appear to be a good fit for AMP Bank's growth strategy.
The fact that the bank had made a A$5 million profit on its Australasian operations was the figure which was publicised, but the cost of relocating the NZ head office to Sydney and an A$18 million loss on its UK banking platform, launched in June 2000, pushed the unit into the red once more.
In AMP's most recent half-yearly result, the bank posted a A$4 million profit in Australasia, but - in what is becoming a familiar story for AMP - the UK operation lost A$7 million for the unit to once again be a drag on the company's bottom line.
But amid the flowing red ink are signs that there is now the core of a sustainable business, in Australia at least, where AMP Bank vies with ING Direct as the fastest-growing deposit taker in the retail market. Analysts have stopped - for the time being - talking about when AMP Bank would either be closed or sold.
It's not simply because there are problems elsewhere in the AMP empire, but because a trawl through AMP Bank's results throws up some figures which give cause for some optimism.
In amongst all the headlines about Pearl and Paul Batchelor's resignation, Standard and Poor's has put AMP Bank on credit watch with positive implications.
From start-up in March 1998, AMP Bank has assets of around A$8 billion and 350,000 customers. Operating income for the 2001 financial year was A$106 million.
When put against total expenses of A$171 million, that may not look very imposing, but AMP should be able to cut back many of those costs as the business goes forward. The deal to outsource credit card processing to Certegy, for example, is likely to drive some costs out of the business.
In NZ, one-off restructuring costs from the move back to Sydney, and the loss of 150 jobs, dragged the result down by around A$15 million.
Also, the profitable GIO Building Society, which is in the process of being integrated into the AMP Bank entity, is still quarantined from the AMP Bank balance sheet. That integration should have been completed by the time AMP next reports full year results, and should have a positive impact.
Start-up costs in the UK are also dissipating, and AMP has said the bank is meeting its targets there.
In March, Craig Meller was appointed head of AMP Bank, coming to the Sydney-based job from the UK where he had been managing director of Ample, AMP's online financial services product launched in June 2001.
The assessment of Meller is that he has particular expertise in distribution and leveraging online platforms, which would appear to be a good fit for AMP Bank's growth strategy.
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