Morning, everyone, and welcome to AMP full-year results. I'd welcome you also on this Valentine's Day, which is our second Valentine's Day, to deliver the results. Before I commence today, can I firstly recognize the traditional ctodians of the land on which we're holding this meeting, which for is the Gadigal people of the Eora Nation, and I'd like to pay my respects to the elders past and present? I also, of course, have with me today Blair Vernon, who is the CFO of the organization. Right, so what are we going to talk through today? Firstly, I jt want to give you a brief overview of the results, then Blair will do a deep dive into all of the results, including a focus on costs and capital.
And then we're going to go further into the BU results, together with the achievements through 2024 and what we're planning to focus on in 2025. And of course, we're going to finish with some guidance and allow time for Q&A. If I just look at the overall result, I believe we continue to deliver on financial performance, but also business performance. Underlying profits up over 15% to AUD 236 million, and correspondingly, our earnings per share up 25% through performance, but also the share buyback. We're delivering on the controllable cost promises despite the sticky inflation, which has been absorbed, and we're going to continue to do that through 2025. Our AUM has increased nearly 11%, albeit a good market, but the flows are improving and increasing in all of our wealth businesses.
On top of that, we've executed on an advised transaction that we believe will deliver benefits for all our stakeholders, including the advisors that have moved to Entireti. With completion of our share buyback of AUD 1.1 billion, we continue our capital program with the announcement of a final dividend of AUD 0.01, franked 20%, taking the full-year dividend to AUD 0.03. If I just look at our businesses overall, as mentioned, our wealth businesses are delivering improving results. The platform is showing great attraction in IFAs, with a real focus on that core market of superannuation. Our superannuation investment business is now delivering on price, performance, good insurance, service, and pleasingly, our reputation is at all-time highs, and this is leading to really improved flows. New Zealand is a more intense environment, but the business keeps delivering as well as diversifying the revenue base.
When we come to bank, I think we all know it's a more challenging environment for small banks, but we've delivered modest growth in the second half, as indicated, and continue to focus on margin. I'm also very pleased with the execution capability during the year. We've been using AI and have now launched at scale across our contact center in SNI, and we're in the process of rolling across the other contact centers. We're also delivering some solutions for advisors in terms of meeting prep for clients. Coming to our portfolio, we can see that with the advised transaction, the portfolio continues to simplify. All of our remaining businesses now have clear growth strategies to execute upon. The partnerships have also shown improved growth and performance in 2024, removing some of the one-offs that we experienced in the prior year.
Just contextually, we can see that we continue to compete in an environment where the dynamics are positive for all of our businesses. There's high household wealth, especially in the more mature demographic, a thriving super environment with increasing focus on retirement needs, where we have been specializing for the last few years. Increasing needs for advice, where we can leverage our partnerships as well as the intra-fund capability we have and the new digital proposition that we launched last month. We also now have a solution for those micro and small businesses, together with the launch of transaction capability in our new bank. Our shareholders are a key stakeholder, but we also remain focused on our other stakeholders being customers, people, and community. Customer satisfaction scores continue to improve across all of our businesses.
Our staff engagement has increased another point in 2024, and our foundation continues to support the community with not only charitable donations, but also over AUD 13 million committed to impact investments, and we've maintained carbon neutrality for the 12th year in a row. Blair, can I ask you now to talk through the detailed financials?
Thanks, Lex. Turning to the results summary, as Lex mentioned, underlying profit is up over 15% for the year to AUD 236 million. Total revenue was down slightly compared to the prior year, with increases seen in our wealth management businesses, but offset by bank earnings as a result of the margin compression we've previously spoken to. Our cost efficiency focus continues to emerge positively across the business. Variable costs are down 7.5% for the year, mostly attributable to reduced investment management expenses, while controllable costs are down 6.1% to AUD 648 million, delivering ahead of our target of AUD 660 million for the year. Earnings per share are up 25% to AUD 0.09, as Lex mentioned, and pleasingly, the cost to income at a group level fell a further 2.7%- 63.8% for the year. Statutory profit continues to be a simpler reconciliation compared to prior years.
Business simplification expenses is the most significant item at AUD 43 million after tax, which is in line with our previously communicated program spend in this area. Other items at AUD 34 million after tax predominantly reflect the already advised AUD 36 million loss resulting from the advised transaction. Year- on- year, stat profit is down given the 2023 performance was materially impacted on the upside by the sale of the AMP Capital and Supercontents businesses. Just turning to AUM, as Lex mentioned, up by almost 11% for the FY 2024 year at the close. Pleasingly, the significant uplift in cash flows and platforms and the improved retention in super and investments have contributed positively relative to FY 2023. The majority of the overall increase is accounted for in market movements, which were significantly positive through the year.
Margins in our wealth businesses saw modest decline, largely in line with expectations, and we will discuss further as we turn to each of the individual business units, particularly platforms. Just turning to the business unit overview snapshot, a breakout impact across those reported business units shows continued improvement across our wealth businesses, offset by that reduced performance in AMP Bank. The platforms highlight for us the significantly improved cash flow over the prior year. Super and investments continue to improve retention off the back of that improved offer to clients. Bank profits were impacted by NIM compression, but a strong cost-out response offsets that in part. New Zealand continues to deliver consistently year on year, and our group performance improved year on year a function of the increased partnership revenue, as well as benefiting from our business simplification program. Now turning to costs in a little more detail.
Controllable costs, as I mentioned, were AUD 648 million for the year. Adjusting for the advised sale, our target for FY 2024 was AUD 660 million, so this outcome from our perspective is very positive. Employee costs continue to reduce, reflecting reduced headcount through FY 2024, but also the run rate effect of the reductions that we talked to that late in FY 2023. Insurance and professional services costs also saw a significant reduction as we further streamlined vendor contracts and also reduced our overall consulting support. Technology costs increased slightly, reflecting both our ongoing investment in business units for growth, and at the same time, this year absorbed most of the impact of stranded costs, which we expect to continue to address in the coming year.
This absolute reduction in controllable costs is a significant achievement, considering we absorbed approximately AUD 20 million of inflation impacts emerging in our cost base, particularly in the latter half of FY 2024. Our FY 2025 controllable cost target is confirmed at AUD 600 million, which will represent a further 7.4% reduction on our FY 2024 performance. A substantial part of this reduction will be addressing stranded costs within the business arising from the advised transaction. We expect the majority of controllable cost savings to continue to emerge through the group cost centers, thereby ensuring our business units can maintain a balance of focus on growth. Our business simplification program continues into 2025, with a forecast investment of up to AUD 150 million pretax unchanged from our previous guidance. Consistent with FY 2024, we anticipate absorbing inflation and other business unit growth-related cost uplifts within this absolute target. Now turning to capital.
As previously flagged, the conclusion of our AUD 1.1 billion capital return program in 2024 provided the opportunity to reassess our overall capital position and also our approach to reporting this aspect to the market. Common Equity Tier 1 is our preferred measure for reporting capital moving forward. It comprises shareholder equity, but removes DTAs, investments, and associates, as well as other regulatory adjustments. Total capital resources reduced 5.5% year on year, largely reflecting that final tranche of our capital return program. Deductions for regulatory adjustments and DTAs are reflected in the table, showing a group CT1 total capital position of AUD 1.769 billion. Set against our calculated CT1 capital requirements of AUD 1.63 billion, we have an FY 2024 CT1 capital surplus of AUD 139 million. For completeness, we've also provided a summary of our capital return program across all three tranches.
This highlights the significant reduction in issued shares as a result of the program, with an average buyback price per share of AUD 1.16. As we've done in previous periods, this waterfall shows the movement year on year of our excess CT1 capital. Net of profit uplifts, the predominant feature is, of course, our buyback program completed in 2024, as I've just spoken to. Our approach to capital management moving forward is framed by a number of considerations. Naturally, we're looking to manage our balance sheet through the economic cycle with an overriding goal of enhancing shareholder returns. We believe modest leverage is appropriate for a group such as ours, and most importantly, having completed the significant capital return program, we are mindful of reorientating towards growth in our business portfolio. Our revised CT1 capital framework includes our required buffers above regulatory minimums.
Our goal is to target stable returns to shareholders while managing for one-off events appropriately. As Lex mentioned, we are declaring a final dividend of AUD 0.01 per share, 20% franked, which will see our FY 2024 full-year dividend of AUD 0.03 per share. Looking forward, we are targeting a dividend of AUD 0.02 per share per half through FY 2025 at the same 20% franking rate. We see 2025 as having a number of uncertainties. Hence, we have elected to focus our guidance on FY 2025 at the present point. Our forward view of dividends is framed against these considerations we note on the slide, seeking to close out legacy matters, realizing upside opportunities as they emerge, and above all, positioning us for growth. Lex and I are now going to talk to further detail across each of our business units. Firstly, turning to platforms.
Platforms' impact is up almost 19% in the year to AUD 107 million. Net cash flows of AUD 2.8 billion are almost double our FY 2023 performance, with particularly strong flows in H2. Managed portfolios continue to grow strongly, closing the year with over AUD 19 billion of AUM. The North Guarantee product had a positive impact of AUD 10 million on the FY 2024 result, reflecting favorable conditions, albeit that was slightly down on FY 2023. While we continue to invest for growth in this key business unit, the management team have equally maintained a disciplined cost focus, including lowering investment management expenses. Average margin was down slightly at 45 basis points, which remains a key area of focus for us. Turning to margin in more detail, the two basis points reduction we are reporting in FY 2024 has emerged in our other fees category, mostly the investment management fees component.
The key driver of this change is reflected in the bar graph at the bottom of the slide, which essentially highlights the changing mix of our AUM. Growth in management portfolios through the year is at a narrower total margin than our traditional managed funds products, and so the change here is a consequence of growth mix, not a change in our pricing formula per se. Margin in H2 was lower than the average margin of 45 basis points that we report here through the year on the slide. We remain confident the actions already underway by management will see an improvement in this trend as we look into FY 2025, and we'll address that when we come to our guidance slide. The significant improvement in net cash flow through FY 2024 is highlighted further in this year-on-year comparison.
As we've previously reported, our book has overweighted super and pension balances compared to many other platforms, which is reflective of our clear strategic focus on this part of the market. Following the divestment of our advice business, we have baselined our approach to measuring advisors used in North. North has a total advisor population of more than 4,000 users. Our primary focus for growth and retention, however, are the 2,188 advisors with greater than 1 million of FUA on North, and this is a key metric we are seeking to grow. Beyond this, there remains a significant addressable market of advisors who don't yet use North, and we believe would particularly benefit from access to our market-leading retirement solution for their clients. During FY 2024, we established 99 new distribution agreements with AFSL holders and added over 140 new advisors to the North platform.
We do operate in a market of greater than AUD 4.1 trillion, which continues to grow at pretty good multiples. We are one of the leading players in superannuation, and we do have a vision to be the place people can come to to gain confidence in retirement. We've demonstrated that we can innovate in this area through our new lifetime solutions, which now have 350 million in assets under management, but just as importantly, 460 million of new assets under management as a result of the launch of these solutions, and we are unique in that we've got solutions across the spectrum, whether it's simplicity for the direct clients or simple needs for advisors' clients, and more complex needs where North caters. We've also built a relationship with Entireti through the advised transaction, and we see growth opportunities for both parties here.
And I want to say that advice is in our D&A, and we're proud of the solutions that we continue to co-develop with our advised partners. In 2024, we continued the good work in our platforms business, investing in sales capability and management. We continue to invest in digital capability for both advisors and their clients. We're now starting to bring new practices, advisors, and customers to the platform, as Blair indicated, and Lifetime's now used by 85 licensees, with 73% of clients being new to North, and it remains a real opportunity and focus for us through 2025. In this year, we need to continue on the journey and keep doing what we're doing. We want to improve and add to the retirement solutions we've already delivered, further digitization, including tools using AI to assist our advisors, and look further for opportunities to leverage that AI capability. We want to use our investment management capability to improve the margins.
Turning now to super and investments. Underlying impact for our super and investments business is up more than 26% at AUD 67 million for the year. This result reflects positive market conditions, reduced costs, but also a one-off positive impact to investment income of AUD 4 million in the FY 2024 year. Disciplined cost controls saw reductions in both controllable and variable costs, noting we don't anticipate IME cost reductions to replicate in future years. Margin management continued to be a strength in this business, averaging 63 basis points for the year. Investment returns in excess of 15% for MySuper members in 2024 contributed to our enhanced proposition for members. That improving overall value proposition for members is reflected in the significantly improved net cash flow result for FY 2024, shown in this graph.
This continued year-on-year improvement is predominantly a function of improved retention across the portfolio. Excluding mandate losses in prior years, our trend towards positive overall net cash flows continues in line with our previous guidance.
As with the platforms business, for our S&R business, we're playing in a large market, and we have a very big brand. The business is now majority personal members, who tend to be more engaged, particularly as we now have those key ingredients for success that I talked about: price, performance, insurance, service, and reputation. We also have less exposure to those very large corporates, which does reduce our future risk, and it allows us to focus a little more. I should add that that mid-corporate sector does remain an area of interest for us and one we continue to engage with.
If I look at 2024 and 2025, you can see good progress in 2024 with top quartile performance. We've improved our member experience and upgraded our website to allow easier interaction. We've also improved our reputation to long-term averages, which is particularly important for this sector of the market. And we've improved brand awareness, and most importantly, consideration for AMP as a superannuation provider. And we've made retention in this business a priority with outbound calling and our new advertising. In 2025, already we've launched our new digital advice solution in January, and to date, we have nearly 900 customers who have done their retirement checks, with 50% of those going through to the advice solution, all without a single dollar of marketing. We will launch new lifetime solutions, which are more simple than ones we have on platform, in the next quarter, and we continue to drive awareness in corporate and super spaces, personal spaces, for our solutions.
Now, turning to the bank for FY 2024, AMP Bank continues to operate in a highly competitive retail banking market on both sides of the balance sheet. Impact for AMP Bank in FY 2024 reduced to AUD 72 million, reflecting lower net interest income as a result of our previously flagged NIMS compression. Offsetting this revenue decline, the bank saw reduced costs across both variable and controllable lines as management responded to lighter business volumes, especially. Pleasingly, our actions have seen an improvement in trends in the second half of 2024, with modest growth in mortgages against more limited margin compression.
Key metrics such as LCR and CT1 remain comfortably above minimums, reflecting our prudent approach to managing the bank. Against that backdrop, the softening of return on capital and cost of income ratios remains a critical management focus. Over full year 2024, we experienced 16 basis points of margin compression when comparing the full year averages. There are a range of mixed changes in our loan book reflected in this walk, but notably, our retail deposit portfolio remains central to the challenge in NIM management for AMP Bank. This reinforces again the importance of our new digital bank offer to broaden deposit market opportunities for the bank. Consistent with prior periods, we remain vigilant and focused on credit quality as reflected in these key data points on the slide. Despite prevailing economic conditions, more than 60% of our mortgage customers remain ahead on their repayments. Our average dynamic LVR at a total book level is 53%, and we have only a nominal volume of loans greater than 90% LVR. Arrears rates continue to normalize through H2, further reflecting our conservative overall credit position.
You're well aware that the market we're operating in with our bank remains extremely competitive, and we've made a conscious effort to focus on margin over volume. We did deliver modest growth in the second half, as we'd previously indicated, and we continued to focus on driving efficiencies and looking for those niche opportunities to add both margin and volume. We've maintained positive relationships with brokers, which remain an important stakeholder for us given the distribution, and we're focused on those higher margin investors, as well as making it easier for the self-employed borrower, which is consistent with the strategy for the launch of our new bank capability.
Speaking of our new bank, I want to step back a moment and just a reminder about why we launched this proposition. Firstly, we do see it as an opportunity in that small and micro space where not many others have focused, and also importantly, it creates a diversity in our customer base, but also in our deposit funding, as well as adding transaction accounts for our personal customers. While the official launch was this week, family and friends have been testing for many months. The new Numberless Card, which delivers greater security and safety for our customers, has excited interest, and we have over 11,000 pre-registered parties who signed up to campaigns to have a look at the proposition. The launch is fully functioning, including transaction accounts, and we'll have frequent releases through 2025, but these will depend on customer behavior and requirements.
Now, turning to our New Zealand business, AMP Wealth Management continues to perform strongly in a challenging market, with EBIT up over 8% to AUD 37 million for the year. The strategy of revenue diversification in this business continues to be executed against, with improved revenue across both lines. Controllable costs reduced year-on-year despite elevated local inflation, reflecting a sustained business simplification program in this business. Margin eased slightly through the year, reflecting the ongoing change in mix, with predominantly that growth in KiwiSaver, which is a lower margin product across the board. Net cash flows were positive, reflecting a focus on that KiwiSaver growth, as well as our focus on corporate superannuation retention activities.
The New Zealand business is a little different than the Australian, having a presence in KiwiSaver, but also a footprint in general insurance distribution and a bigger footprint in advice and financial coaching. While the dynamics of the market are a little more challenging at the moment, the long-term trends still remain positive. We are well positioned, especially in that area of work that's closed solutions around KiwiSaver. In 2024, you can see that our investment performance continues to improve the maturity of the new strategy that we implemented in 2021. The EnableMe acquisition is expanding and helping to diversify revenue for our business. And KiwiSaver was up almost 4% in terms of funds due to retention and, as I mentioned, the workplace arrangements. In 2025, we need our New Zealand business to just keep doing what it's been doing, acknowledging that it is a more difficult economic environment.
Now, finally, turning to our group business unit. Our partnerships in China saw significant improvements through the year, up more than 20% to AUD 47 million for the year. Other partnerships, which predominantly represent our PCCP business in the U.S., rebounded significantly, contributing AUD 32 million to the result. Collectively, the 36% improvement in our partnerships performance seems to return more in line with our expectations of performance through the cycle. Other revenue at AUD 13 million reflects the residual revenue signature of the retained assets associated with the now discontinued advice business unit. Controllable costs fell almost 10%, although remained elevated as a result of stranded costs being held at the corporate center. This remains our clear focus for improvement in FY 2025. Interest expense on corporate debt is down in the year, reflecting minor timing differences in the recycling of facilities entry year. Investment income from group cash is down year-on-year, reflecting the reduction on group cash holdings as we further optimize our capital and liquidity position. Impact performance for the group segment nonetheless continues to improve year-on-year.
Let us take a moment to look at our China partnerships. We've now been able to rebuild the relationships with China Life through the visits we've enabled over the last few years post-COVID. The China market continues to remain supportive of both public and personal pension savings, and both CLPC and KLAM are benefiting from this focus and growth. As you'll see, the growth remains positive, and we're working hard to support this. Working with our partners to improve the dividend payout given the strong performance is certainly a priority for us through 2025.
Now, looking ahead to FY 2025 guidance, which is presented on this slide and naturally subject to market conditions. In our platforms business, we are forecasting margin to be circa 43 basis points on average through the year, consistent with our average margin in the second half of 2024. In our super investments business, we forecast margin to be flat at circa 63 basis points. In AMP Bank, our expectation is that NIM will be broadly in line with FY 2024, given the sustained competitive conditions we see prevailing in this segment. As previously noted, our controllable cost target is AUD 600 million, and our business simplification program continues within our previous guidance of up to AUD 150 million pre-tax for that program. Partnerships collectively are expected to return circa 10% per annum through the cycle,
So just in conclusion, 2024 was a strong year of delivery, being the culmination of many years of very hard work. The portfolio is simplified, the cost promises have been delivered and continue to be delivered in an inflationary environment. Growth is emerging in our wealth businesses. We've now delivered a new bank, digital advice, and AI solutions for our people and customers. We've also returned AUD 1.1 billion in capital to our shareholders and announced a continuation of AUD 0.02 per half dividend through 2025. In 2025, we reorient our focus to growth, but I can assure you we will not neglect the continual drive for efficiencies. Thank you for your time, and I'll now open to Q&A.
Thank you. We will now begin the question and answer session. At this time, if you'd like to ask a question, please press star 11 on your telephone and wait for your name to be announced. If you'd like to cancel your request, please press star 11. One moment for the first question. First question comes from the line of Simon Fitzgerald from Jefferies. Please go ahead.
Hi there. Thank you very much for taking my questions. I'll just leave it at three. Just in terms of the split in the platforms business between managed funds and managed portfolios, can you just sort of talk about this? Obviously, it appears to be new business wins over the sort of legacy formats, but ultimately, how do you see that balance sort of playing out?
Yeah, I think if we look at the trends in the market at the moment, there is a greater propensity for the new business to come through the managed portfolios because that's really making it easier for advisors to advise their clients. I'm not suggesting that that's going to all happen through 2025, but certainly that is where a lot of the growth is coming for the advice machine, Simon.
Okay, that's fair. Could you just sort of talk about the premium that you would have got on, say, the old sort of managed funds versus the new sort of format of managed portfolios? Just trying to understand the difference in the.
Yeah, well, you can see that most of the, apart from a couple of different items which won't reappear in 2025, the margin reduction that we've experienced through the year was predominantly as a result of that portfolio mix. I mean, as I said, we're in a unique position that we've got an investment management capability, which most of our competitors don't, so we can utilize that to gain some of that back through 2025. We've already put a lot of those initiatives in play, which is why we don't see any further degradation. But there definitely is some decline that you can see through 2024 as a result of that mix.
Sure. And just a question on capital, just with the SEP1 capital requirements. I was interested to know if the board buffer reduced over that, just given the residential mortgage book decline by at least AUD 1 billion. I was trying to sort of think about how the board buffer may have changed.
I'll ask Blair to talk through that.
Hi. No, the board buffer itself didn't change materially. Obviously, it takes into account that the mortgage, what you talked about, would come within the MRR requirement. The board buffer sits on top of that for a range of other factors, and so there wasn't a material change.
I think it's important, if I may. I mean, obviously, there's a calculation that you do in relation to bank capital and, for that matter, the wealth business as well. But I mean, when we talk about board buffer, they've got to, of course, consider the risk environments. They've got to consider the stress testing that we have to undertake to make sure that we're going to have a viable business. But I can assure you our board's not in the habit of putting excess margins over the top of the regulatory requirements.
I get that. But we've had an environment where you've seen improvement in impairments, and you're sort of talking about it's not a very good environment for growth anyway, so that board buffer could have been a bit slimmer or the thought, but leave it at that.
Well, I think. Sorry, just I'd say the board buffer obviously doesn't justify the bank. It's certainly across a range of businesses and the group, so it's a composite of all those things.
Okay. Maybe if I could just ask on the stranded cost, then, the AUD 45 million that's part of the business simplification that relates to the advice business, what's the sort of timeframe you think that you can extinguish that by?
2025 is our promise, Simon. We're not walking away from our cost promises in relation to that, so we're still committed to that 600 that we've put in our guidance, and a large part of that consists of the AUD 45 million in stranded costs.
Okay. And then one final one, just on the KLAM and the CLPC, it looks like there was a reduction in the carrying values there. Just wondering what you could talk to in terms of what's behind that.
No, I don't believe there was a reduction in the carrying values. They've both contributed to the profit result here and their equity accounted for, so I can take that up separately.
Yeah, sure. Thank you.
Thank you for the questions. One moment for the next question. Our next question comes from the line of Andrei Stadnik from Morgan Stanley. Please go ahead.
Good morning. Can I ask my first question around the North Lifetime product? Can you just repeat those numbers? It seemed like there was something below 400 and something just over 400. Can you just explain the difference? And how quickly have you been able to get to these sort of figures in the lifetime? And what kind of customers are you finding success with?
Yeah, so maybe I can just pause a moment there to talk about our lifetime solutions, which we launched in 2023. And look, there's several reasons for the importance of that and why I mentioned the two figures, which I'll repeat. But firstly, our platform has been a good platform for many, many years. But I think as a result of AMP becoming internally focused, many other good platforms exist as well. And so we really needed to innovate to have something different about our platform. And that's why the retirement solutions was really important, because it allowed us to open doors to practices that we hadn't opened before. And of course, we want some on our retirement solutions, but it's also about the new customers and new advisors that we can bring to the platform. So over that period, and I think we launched in mid-2023. Don't quote me on that. I can get the exact date, but it was around then.
We've brought on, actually, in the retirement solutions, AUD 350 million. But I mentioned that second number of AUD 450 million because that's new clients to the platform, and that's a really important indicator to us about how we're attracting new business.
Got it. Got it. Thank you. My second question, can I ask around the deposit mix in the bank? That was a small benefit during the year. Can you explain a little bit about what's driving that?
Yeah, I'll ask Blair to comment on that.
Yeah, I mean, there's obviously a range of mixes, changes through the bank through the year. The deposit mix challenge we faced across the year was mostly around saver. I mean, the TD portfolios still remain very, very competitive, but the saver product and the saver kind of category, I would describe it as in the market, is extremely competitive.
Thank you. My third question is maybe a little bit of a side question. Can you explain a little bit about the innovative Numberless debit cards that you're launching and what sort of benefits do you expect for AMP or AMP's customers from that?
Yeah, the new solutions that we've launched, I mean, the debit card's got a lot of attraction, but it actually goes far more broader than that. Firstly, it is a digital-only solution for small and micro businesses. So I'm not talking about small and medium. We're talking about the less than 20, and a lot of those are self-employed. So that's the first category. And the second category, our bank has not had fulsome transaction capability. So we're also launching fulsome transaction capability as part of these new solutions. As I said, it's digital-only. It's not digital-first. It is digital-only, and it is quite a unique proposition.
We really wanted to launch this to diversify our deposit base, which we've just talked about. Of course, there's lower cost deposits for us in this new solution, which we just launched Monday and publicly on Wednesday. If so, what kind of deposits you've already raised? I think it would be a bit remiss of me after day three to throw a number out there, but clearly, it is something that's really important for us for improving the return on the bank over the longer term.
Thank you.
Thank you for the questions. Our next questions come from the line of Julian Braganza from Goldman Sachs. Please go ahead.
Good morning, guys. Thank you so much for taking our questions. Maybe it's a first question on the bank and just your NIM guidance into next year. Can you just maybe unpack that and just talk about what it assumes just in terms of potential cash rate cuts, changes in funding costs, and the like, just to keep you on the stand and unpack that number? Thank you.
Yeah, I kind of think if we think about the NIM guidance, I mean, we expect that there's going to be rate cuts through the year, two to three, is what our economists say at the moment. But when we look at the NIM guidance, we haven't factored that we'll be able to gain great margin improvements on the loan side for that. So we're assuming the nine there. And as I just said, through the deposits, we could see some improvements there, but basically not factoring much benefit through the book, through the rate reductions at this point, potential rate reductions.
Right. Okay. I understand.
That's why you can see we've pretty much forecast in line with this year.
Okay, and I mean, just the timeline for when we should start to see improvements. I mean, is there any signs that there could be any visibility on that or just too difficult to tell from here?
I think on the mortgage side, there remains a very, very competitive market, and I don't see that easing up dramatically at this point. I mean, when we come to the deposit side, there certainly is some indications that there may be easing there, but I think we're just really cautious about that at this point, and for our new bank, I would expect that the benefits would start to come through there in 2026. Obviously, by the end of this year, we'll have a bit of an indication about where we're going to be positioned in terms of funding there, but I'd expect the benefits to come through in 2026.
Okay. Got it. And then maybe just shifting into just the capital requirements, just the deferred tax asset, just to be clear, was that at all impacted by the sale of the advice business in terms of allocation of that asset between AMP and the business that was sold?
Yeah, there was a small impact of that, but that is not the majority of our deferred tax assets. That has not been largely impacted by that sale. I'm not saying there wasn't some. There was small, but in comparison to the balance, not material.
Got it. Got it. And then just the lower capital requirements on the platform business, from memory, it was worth about AUD 15 million-AUD 16 million. If that's correct, if I'm wrong, but is that still expected to be? Would that come through to shareholders, or how are you thinking about that? Can you talk to that?
I think what you're referring to there might be the change in offer that's been talked about in the market. Is that what you're referring to? Yeah. Yeah, that's the sort of quantum that we would calc. And obviously, as we've said, our goal is to make sure we're as capital efficient as possible. And so what I would just caution is that change doesn't occur until 1 July. And so we'll go through a process with the trustee to work through that. That'll take due consideration. As that works through, then we'll look to realize that through capital resources.
Okay. Got it. And then just a final question on just your investment, just your portfolio of investments across KLAM, CLPC, PCCP. Any further comments around strategy there to monetize value or just, yeah, any updates there?
Yeah, the strategy hasn't changed. I mean, I've said publicly a number of times, particularly our PCCP is not a strategic investment, and we're working with the founders there. But that is a really strong business, and I want to make sure we can get full value for that business. So I think it will be dependent on what happens in that real estate sector in the U.S. But that remains something we're actively engaged with the founders. In terms of the rest of the assets, I mean, at the moment, we continue to work with our China Life partners to continue that growth, which is quite extraordinary, and focus on them, given their performance is so good on improving the dividend payout ratio.
Got it. Thank you so much for taking the questions.
Thank you.
Thank you.
Thank you for the questions. Our next questions come from Nigel Pittaway from Citi. Please go ahead.
Good morning, guys. Just maybe returning to the bank initially, I mean, just interested in sort of the volume growth strategy, particularly as we move into 2025. I mean, obviously, you've had that bad debt impairment release that's helped the bank in second half. So presumably, that's non-repeatable. With your margin guidance, obviously, you did return to growth a bit in second half, but obviously still growing down for the full year and growing below system. So do we expect more of the same moving into next year, or how should we think about that?
Yeah. Nigel, thanks. That's a good question. I mean, we're continuing to really focus on managing that margin over volume at any cost. I would expect that we'll have nominal growth. As I just explained, I don't see as much change in the margin dynamic. So I'd expect nominal growth through the first half of 2025. But I mean, we're just continuing to focus on those niche opportunities. And yes, while there was a one-off, we really drove some efficiencies through the bank that comes through in the second half and into the full year for 2025.
Okay. Thank you for that. Maybe just moving then on to a bit more on platform margins. I mean, obviously, there is this I mean, how much do you think there's a trade-off between sort of generating potential flows and playing with the margin in that business? And also maybe just on the retirement income product, obviously, I mean, do you think there's a point at which we might sort of get an acceleration in flows in those products? I mean, you've talked about sort of leading those products, leading advisors to North, but will that translate into material flows at some point, do you think?
Yeah, there's a couple of questions in there. Firstly, I'd say we're not playing a price game on our platform, right? I mean, the price has impacted due to the mix. And while I consider that that is kind of a market dynamic, clearly, we've been very transparent about the impact of that. As I mentioned, I think with our investment management capability, we do have options that we're exploring to get some of that back into the future. And that is a unique proposition we have. But you could see that coming through into the second half. And some of those initiatives are there, which will protect the margin into the latter half. So that's where I see margins. If I come to our retirement solutions, firstly, I'd point you, and you can see it in the data pack, that our platform flows have been improving quarter on quarter for the last 12 months. And you can see that in every quarter. And in fact, the trends are longer than that.
I think those trends are really exciting for us and the focus. That's not all retirement solutions, but certainly, some of it is. If we reflect on the learnings from retirement solutions, I think there's a couple of things. Firstly, the solution is fantastic. I mean, it's an amazing opportunity for clients to enhance their pension in retirement, but it's complex, and it takes time for advisors to understand it, to be able to talk to customers about it. They typically do it when they're doing a review as opposed to during the year or when they've got a new client. I think it is taking time, but I think it is gaining traction. There's a lot of talk in the market about new solutions coming. I don't think that would be a bad thing because we need to get more focus on this part of the market.
Okay. Thanks again. Mainly just sorry for the final question. Just, I mean, obviously, you've talked about sort of wanting to keep capital aside to now sort of focus a little bit more on growth. I mean, when you're thinking and obviously, the dividend was half in the second half, but it wasn't the first half. When you're thinking about sort of organic versus inorganic growth, sort of how do you sort of think about that?
Yeah. Thank you for that question. Maybe I can just make a couple of comments on the capital before I talk about the inorganic and organic growth. I mean, firstly, when we sit here and with the board deciding on the final year dividend, of course, we're very conscious about the fact that we have been a program of returning AUD 1.1 billion. We had the AUD 0.02 in the first half, the AUD 0.01 in the second half, and also about AUD 240 million of share buyback during the year. But we also sit here and we go, "We're in a bit of a volatile market. We've got some legacy items that we still need to work through, and we've got some upside there." The upside in terms of the AMP capital investments, we just talked about non-strategic assets. So there's some upsides and downsides.
And as a board, we really wanted to give a bit of certainty through 2025 about that AUD 0.02 per half, which is why we announced the AUD 0.01 per quarter and wanted to give the future guidance. I think you'd also expect us in this environment not to have zero surplus. If I look forward to inorganic versus organic growth, I can assure you our focus is organic growth. That's what we're living and breathing every day. And if there ever was to be inorganic growth, and I've said this in the past, it might be bolt-on in terms of capability, or it could be scale. But we're not looking at anything at the moment.
Okay. Thank you. Thanks very much.
Thank you for the questions. One moment for the next question. Next questions come from the line of Andrew Buncombe from Macquarie. Please go ahead. Hi, team.
Thanks for taking my questions. Just two from me, please. Just on the first one, we've obviously got a step down of AUD 48 million in the controllable cost guidance for 2025. Out of interest, how much of that has already been delivered? Thanks.
Yeah. Unfortunately, with controllable costs, if you don't have the initiatives in place by the end of the previous year, they're really difficult to deliver. So that's why I can confidently say that we're going to be delivering the controllable cost targets for 2025. I mean, it's not going to be easy because we're still in a higher inflationary environment that perhaps understood when we made those commitments, but we are absolutely committed to delivering those controllable cost targets of 600.
So if I'm interpreting you correctly, should we be assuming that that AUD 600 million is flat half on half in 2025 then?
Do you want to come out? We typically have higher costs in the second half to the first half because of our cycles.
But yeah. If you look back over our prior periods, Andrew, you'll see there is a slight seasonality between first half, second half. That's continued to narrow. But we typically see a little higher costs in the second half. The reality is I would expect a little bit of that seasonality to continue, but continue to moderate. Obviously, there's always a little bit of timing. And so, but the reality is we are laser-focused on that 600. We've got very clear pathways on the net, I would stress, the net 48 that we need to remove, which is obviously, when you gross that back up for inflation and so forth, there's a larger number. So it's no mean feat in the current environment, I think.
Excellent. And then my other question was in relation to the revenue margin guidance. You've given it for S&I and also for platforms. Can you talk to how you're thinking about that metric in New Zealand as well, please? Thank you.
Yeah.
Yeah. We've typically just given you the P&L for New Zealand. So as I said, we're kind of diversifying the revenue there. The New Zealand business has consistently delivered about the numbers we delivered this year in terms of impact. Don't see any real changes in that space at this point.
That's it from me. Thank you.
Thank you for the questions. One moment for the next questions. Next questions come from the line of Kieren Chidgey from UBS. Please go ahead. Excuse me.
Morning, Kieren.
Your line is open. Please unmute locally. While we continue to hear. Certainly. Allow me to move on to the next questions. One moment, please. Our next questions come from the line of Lafitani Sotiriou from MST Financial. Please go ahead.
Hi, good morning, and thank you for the question. Can I first just double-check, Lex, did you say that you aren't currently looking at any acquisitions?
I did say that Laf. Except for new customers.
So you're not looking at any acquisition?
Well, except for new customers, we're always obviously looking for new customers.
Yeah, okay. But not any acquisitions in the market?
We're not looking at anything at the moment, Laf.
All right, great. Can I just then circle back on the overall capital discussions? Because previously, we could see what the board buffers were for the respective businesses or divisions, and you used to have broadly AUD 500 million in the overall board buffer. And so if that's still broadly the same, there was AUD 200 million allocated to the group level. Can you just unpack what that is and provide a little bit more detail as to why it's not moving around?
Yeah. I'll just ask Blair to talk through how and where we're thinking about capital.
Yeah. Just to reiterate the prior point, I mean, broadly, the board buffer hasn't changed. And so we're seeking to sort of get away from a conversation of minimum risk plus board buffer. We've chosen to focus on sort of total requirement. In terms of the group allocation, Blair, that sort of circa AUD 200 million, I mean, there's a number of things in there, but the most significant of which is the elements around the various indemnities, warranties, and legacy matters that exist at a group level.
And that we would expect to continue to address over time. So it's not, it's not set in granite or stone, but the reality is at the moment, our focus is continuing to close out those matters and then prudently have a view about how that might emerge as available capital.
Got it. And so one of the things that we've spoken to in the past, and we're nearing some of the end dates for, is the carried interest from previous asset sales. And you've got it there as a potential positive contributor for future periods in terms of capital. Can you just talk us through where that's tracking or if you and when we may get some more clarity or when the end date is for some of those hurdle rates?
Yeah. Thanks, Laf. As you know, some of those go out through the years. And we haven't put it into our results for obvious reasons because it does depend on performance. And I think we've said before, we anticipate positive performance, but I'm not going to make a prediction about it, about what it would be, especially given the way markets are moving around. So look, I know.
So can I just clarify? When some of those assets were sold, you indicated at the time it would be two to three years. And we're in that time frame now. So I just don't quite understand when you said previously it'll be two to three years, and now we're at that point, and we still don't have any information. So one of it was in relation to the ability for fundraising occurring in those assets. Has that been occurring? Has it not been? I'm unclear why you can't give us any sort of extra color on where that's being set.
Most of the upside is from a payment once those assets are sold. As you can imagine, and those are in particular funds. As you can imagine, given the environment, most of all of those assets are offshore. Some of those funds can be extended for a period of time, or they can be resolved in a period of time. I would expect that we'll see some of that through 2025, but I'm not going to make promises because anything can happen in those PE funds, and we're monitoring it, but it depends on the value at the time that the assets are sold,
but that's two things, right? So that is the assets within those funds, but there was also talk at the time you sold the assets for performance fees or earnouts if certain hurdles were reached. So have all the earnouts hurdles just disappeared? Are you not entitled to get any of those earnouts, or is that still in the background?
I think it's still in the background, but I'm not.
Yeah. I mean, the critical threshold issue on those funds, Les, is obviously closure. And as Les mentioned, some of them have extension dates. Ultimately, the realization of any carry or performance fees is always going to be in question till the end. And so we are looking at.
No, I understand that for the carried interest on the investments that you've got, but there was also components that were separate to that that were based on assets you sold and having earnouts attributed to whether they're successful in raising money and the like in those funds. So that just seems to have disappeared completely from the conversation. Does that mean you can no longer earn performance fees for that, for the actual assets that were sold?
Yeah. No. I'm sorry. And so in terms of performance fees and particularly related to future fundraisings, we see those unlikely based on where we currently are in the market.
You see those as unlikely?
Yes.
So those have disappeared?
Yes. We see them as unlikely, Laf.
Yep. Okay. And just one last question. Previously, you talked about for the super investments platform was potentially outsourcing the replatforming and exploring options in the market or whether you go it alone. Is that project still something that's on the radar, or how should we think about that?
We are maintaining our platform internally. We're just focusing on the digitization and customer experience in relation to that. There is nothing wrong with the backend in terms of the ability to be able to process transactions. We just need to work on the digital capability.
All right. Got it. Thank you.
Thank you.
Thank you for the questions. We do have the last questions coming from the line of Siddharth Parameswaran from JPMorgan. Please go ahead.
Thank you.
Hi, this is actually Darren J. Dutton from JPMorgan. Just two questions from me, please. So firstly, on cost out, just following on from Andrew's previous question, should we expect any run rate benefits of cost out actions taken in CY 2025 into CY 2026? And do you see any further cost out opportunities beyond what you've communicated looking into CY 2026 and beyond?
Yeah. I mean, I mean, while we've got some strain of costs we need to deal with, which might emerge only through 2025, I would expect there'll be continuation through 2026. The one thing I want us to focus on as we're reorienting towards growth is a cost-to-income measure, getting away from this absolute cost because we really want to grow our businesses. So that's the measure I'd prefer to be thinking about in 2026, and we can compare that with the market and with our competition as well. But yes, while there'll be some one-offs through 2025, some of those benefits will flow through. At this point, other than the normal BAU focus on efficiencies, we're not making a large-scale promise to the market in terms of further cost reductions after 2025.
Do you expect that cost-to-income ratio to trend downwards from 2026 and onwards?
That's absolutely our focus. And hopefully, it's complementary revenue growing and also just more efficiencies.
That's clear. Thanks. Just a second question on variable costs. Looks like those have come in better than expectations again. And just want to understand what the drivers of this could be by segment. I know you mentioned investment management expenses as a key driver. Do you expect this to be the new level going forward, or are there risks that this could kind of revert to historical levels?
Yeah. Over the last couple of years, we've really spent quite a bit of time on simplifying the menu and the options, and you can see those IMEs coming down. I wouldn't expect the same level of efficiencies in the future given the work that we've done over the last couple of years. But obviously, it's something we continue to focus on and work on.
That's great. Thanks.
Thank you. Thank you, operator, and thank you, everyone, for your attention today.
That does conclude today's conference call. Thank you for your participation. You may now disconnect your line.