Hi, I'm Sharon Callister, and I'm the Chief Executive Officer of Mission Australia. Incredible as it sounds, we have been associated with AMP since 1862. That is phenomenal when you think about it. It all started with an AMP employee, Benjamin Short, who was an insurance agent. He was also a very strong Christian and philanthropist, and he saw that there was a need in society, not just for life insurance, but also philanthropy to help people who were basically living with incredible disadvantage, so people who were homeless or at risk of homelessness. It's incredible to think now, today, if we had our time, how many people do we see with that kind of vision? I'd have to say it's very few, but Benjamin Short was absolutely outstanding. It's a really great story to celebrate, and I think it's been like seven generations since then.
We have had a long-term relationship with AMP. We have a founding purpose, and we are very focused as a Christian organization on meeting human need and helping end homelessness and communities to thrive. AMP is always looking for tomorrow and making tomorrow even better. There are a lot of synergies. Again, we may do things slightly differently and have different focuses, but we are so intertwined in terms of our vision and our hope for the future. Firstly, a huge congratulations: 175 years. There are not many organizations in the world that are that old and still strong and still doing well. Longer than Mission Australia, and as we said, we have been around for a long, long time as well.
We just want to say a huge congratulations to you, and thank you so much for the work that you do, not just for Mission Australia, but more broadly in the community at large. We are so grateful for the support that you provide us, but we want you to know that we are hoping that you have an amazing 175th celebration.
Good morning, fellow shareholders, ladies and gentlemen. My name is Mike Hurst, and I am the Chair of AMP. It is my great pleasure to welcome you today to AMP's 2025 Annual General Meeting. Thank you all for joining us and for your continued support and investment in AMP. This is a hybrid meeting, so a warm welcome also to those shareholders who have chosen to join us online. The Company Secretary has informed me that a quorum is present. I will now formally open our 2025 Annual General Meeting. I would like to begin by acknowledging the traditional owners of the land on which we meet today, the Gadigal people of the Eora Nation. We would also like to pay our respects to elders past and present and to all First Nations peoples across the country.
I will now introduce your AMP Board of Directors, who currently comprise seven non-executive directors and our Managing Director and CEO. Starting on my far left, we have Andrea Slattery, Rahul Choudhary, and our CEO, Alexis George. Turning to my far right, we have Anna Lydall, Michael Samuels, and Kathleen Bailey-Lord. Rahul has been appointed by the Board to chair the segment of today's meeting when I will be standing for re-election. On my immediate right, we have our Group General Counsel and Company Secretary, David Cullen, who will assist me in the running of today's meeting. Due to personal circumstances, our Director, Andrew Best, is unable to attend today's meeting and sends his apologies. I'd also like to acknowledge the members of the AMP executive team who are seated at the front row to provide their support today.
Also joining us in the audience is Anita Kariyapa from AMP's auditors, Ernst & Young, as a representative of the lead audit partner. I will now ask David to go through the procedures for the voting and the Q&A process with you. Thank you, David.
Thank you, Mike. To ensure an orderly meeting today, I'll just run through a few safety and housekeeping matters for those in the room. In case of emergency, please follow the instructions from the fire wardens. If we're required to evacuate, we'll be able to do so through the fire escapes at the back of the room on either side of the stage. If you've not already done so, please switch your phones to silent mode. Recording and photographs of the meeting are not permitted. A webcast of the meeting and transcript will be available on AMP's website following the meeting. In terms of Q&A at today's meeting, shareholders may participate in person via the computer shared meeting platform or by telephone. For those in the room, you would have been given a colored card when you registered this morning. A blue card allows you to speak and to vote.
Gray card holders can speak but cannot vote, and white cards are for visitors who can observe today's meeting but cannot speak or vote. You will need your card to ask a question or to re-enter the meeting. For those attendees here in person, the slide behind me explains how to ask a question. You can ask a question by approaching one of the two microphone attendants. We ask you to only approach the microphone attendants when we announce that questions are open to the floor. Please show the attendants your card that you were given when you registered this morning and provide your name. As noted, only blue and gray card holders will be permitted to ask a question. For those attending online, the slide behind me explains how to ask a question via the computer shared meeting platform.
To ask a question, select the Q&A icon, type your question in the text box, and select the topic of your question from the drop-down menu. Once you finish typing, please hit the send button. Online attendees who are shareholders or proxy holders can submit questions at any time. The procedure on how to ask a question via the telephone is now being shown on the screen. Only shareholders and proxy holders can ask questions using the phone line. Questions can be submitted now and throughout the meeting, and they'll be addressed at the relevant point in the meeting. As there may be a short time lag with technology, to ensure your question is received before the relevant time, we encourage you to submit your questions now. For each item of business, we'll first address questions received prior to the meeting and online, which I will read out.
Questions from the room, and lastly, any questions on the phone. Please note that your questions may be moderated. For example, if we receive multiple questions on one topic, they may be amalgamated, or if a question is particularly lengthy, we may need to summarize it in the interest of time. We will only take questions that relate to the items of business being considered at today's meeting during discussion for that item. For shareholders that submit written questions online that do not relate to items of business being considered at today's meeting, one of our customer service or Computershare staff will be in touch with you after the meeting. To ensure a fair opportunity for all attending, we request that shareholders asking questions in the auditorium or on the phone limit their questions to two at a time.
If you have further questions, you may rejoin the queue in the auditorium or call the phone line again to ask your additional questions. If you have questions about your AMP products or services, or about any other personal dealings with AMP unrelated to your interests as a shareholder, we ask that you contact the customer center. If you feel you still have questions after the meeting, please reach out to our investor relations team. For shareholders or proxy holders in the room, the slide going up now explains how to vote. You will need your blue voting card to vote at today's meeting by either using your mobile device to scan the QR code on your voting card or by completing your vote on the reverse side of the card, which will be collected by Computershare once all items of business have been discussed.
If you have queries about how to vote, please speak with one of the team members through Computershare in the room or in the shareholder registration area outside who will be able to assist you. For shareholders or proxy holders online, the slide going up now explains how to vote online. If you experience technical difficulty with the online platform during the meeting, please refer to the user guide on the platform or contact Computershare. Voting on all items at this meeting will be conducted by way of a poll. The Chair has received the results of the direct voting and proxy instructions for each item of business. The proxy position for items two to four will be shown on screen shortly. Final results will be announced on the ASX and published on our website after the AGM. Thank you, Mike.
Thank you for that very thorough analysis, David. The slide going up behind me now shows the order of proceedings for today's meeting, including the items of business as outlined in our notice of meeting. The slide going up behind me now shows the resolutions that we voted on at today's meeting and the proxy position for each item. The notice of meeting contains detailed information on each item. All directed proxies to me are being cast in accordance with the directions provided by shareholders. The available open proxies I am holding in my capacity as Chair of the meeting are being cast in favor of resolutions 2A, 2B, 2C, 3, and 4. As David mentioned earlier, voting on all items will be conducted by poll. Those items are now properly before the meeting, and the poll is now open. The voting icon will soon appear.
Please submit your votes at any time. At the appropriate time, we will proceed with the discussion on each resolution being put to a vote. Alexis George, our CEO, and I will now both address the meeting before we move to the formal business. I'm pleased to be addressing you today at my first Annual General Meeting in the role of Chair. I'm very honored to have been afforded the opportunity to chair this iconic company that last year celebrated 175 years of service to the Australian community. AMP's rich history in financial services in Australia informs our purpose today, helping people create their tomorrow. That clear strategic focus on enabling people to live with financial confidence, particularly when it comes to their retirement, drives our decision-making and investment. For example, to enable us to deliver on this purpose, we have reshaped our portfolio.
We now have four operating businesses: wealth platforms, superannuation and investments, banking, and New Zealand, all vying to compete strongly in their respective markets. This is evidenced in the 2024 result, with the team having delivered a solid financial return on the back of good execution and a commitment to delivering on their strategy. Of course, right now, all businesses are operating in an unpredictable market as a result of the challenging geopolitical environment we face. Obviously, for our shareholders and customers, this can be a worrying time. To you, I would say that in the main, you are investing for the long term. This is not the first time we have seen significant disruption in markets. We do not have to think very far back to recall the impact COVID had on market prices and before that, the GFC.
This is the seventh time in my career I have experienced these event-driven corrections. In every case, the market has recovered and gone on to reach new heights. For our company, the trading price reflects this volatility, as it does for many other listed companies globally. While all stocks will trade on specific factors relating to their business, as a board, we must look through the short-term volatility and focus on the underlying fundamentals in order to grow. Nevertheless, the heightened uncertainty and instability we are currently seeing in markets around the world emphasizes the importance of the management of capital and liquidity. The board has been focused on this for some time and took action to ensure AMP is in a position to meet our prudential requirements. To this end, we took a prudent approach in declaring an AUD 0.01 final dividend.
Capital management is a core part of the board's responsibilities. Last October, we concluded a two-year capital management program enabled by the sale of AMP Capital. In total, we have returned AUD 1.1 billion to shareholders through dividends and on-market share buybacks. In February, we announced the final dividend of AUD 0.01 per share, 20% franked, bringing the full year 2024 dividend to AUD 0.03 per share. The board is targeting a AUD 0.02 per share dividend per half through 2025 in recognition of the importance of dividends to shareholders. Another key responsibility of the board is board renewal and maintaining the appropriate skills, which are critical to ensuring our board is effective. We continue to test that the board is appropriately experienced, diverse, and equipped to navigate the challenges and opportunities ahead. At the start of 2024, we welcomed Kathleen Bailey-Lord and Anna Leibel to the board.
Their appointments enhanced their capabilities in digital transformation and cyber risk, as well as bringing robust knowledge of the financial services sector. The board recognizes the importance of diversity to complement the appropriate skills and experience of directors, and we continue to satisfy AMP's 40-40-20 gender diversity target. We are also focused on ensuring that our approach to remuneration is appropriately aligned to the shareholder experience. In 2024, the remuneration committee conducted an external review of market remuneration for the financial services sector. As a result, the committee agreed that it was appropriate to reduce the maximum short-term incentive for the CEO and executive team from 200% of remuneration to 150% of fixed remuneration from 1 January 2025. This reflects our simplified business and current market practice.
The board also took the decision to update the 2025 company scorecard to ensure it is aligned to AMP's growth strategy and to appropriately reflect the stage that the company is at now. Therefore, we have changed one of the scorecard metrics by replacing statutory net profit after tax with cost to income. This is a more relevant metric as the business pivots to growth where being an efficient and effective provider of financial services will best help optimize AMP's opportunities. These and a number of other refinements we have made are detailed in our remuneration report. Be assured we will continue to refine our approach to remuneration, ensuring that it is appropriate for the size of the business while remaining attractive to good talent. As we look ahead, there is no doubt Australia's superannuation system is globally recognized as a wonderful retirement savings model.
We also know that there is a job for both industry and government to do to solve the complexities of the decumulation phase, truly allowing Australians to live better in retirement. This is something AMP has been working on for a number of years. Core to our strategy is a commitment to providing education, guidance, and solutions that improve retirement outcomes. We will continue to collaborate with government on developing a range of solutions to make Australians' retirement as rewarding as it deserves to be. The board sees this as a real opportunity for our platform and superannuation businesses to be a preeminent retirement specialist in Australia, given our suite of innovative products and services, our deep heritage in this sector, and the need that Australia's demographics is driving.
Turning to the banking business, it is critical that Australia maintains a banking sector that is competitive, innovative, and can serve all tiers of the economy. For the economy to thrive, we need the right regulatory and policy settings that provide protection for consumers and underpin stability while promoting competition. Given the current structure of the industry, with significant concentration amongst four players, this is a difficult balance to achieve. Sometimes regulation has the unintended consequences of pushing all providers to the center in terms of how they operate and the risks they are prepared to take. Unfortunately, consumers and firms at the margins then find it harder to access banking services that are right for their specific needs. This reduces consumer choice and has a very real negative impact on the economy because we know that in any sector, innovation happens at the margins.
Unless we actively seek to address this issue, we will see reduced opportunities for innovation and growth across the economy. The challenge is to administer regulatory oversight in a way that achieves the desired policy settings without an unintended increase in risk to the community. That is by no means a trivial task. Relevant for AMP is the fact that the government has asked the Council of Financial Regulators and the ACCC to review the role and the state of small and medium-sized banks in providing competition and satisfying customer needs, as well as examining the current and potential barriers to competition. This is a real opportunity for industry, regulators, and government to work together to ensure that policy settings support an efficient and fair banking sector and a task that AMP is looking forward to contributing to. I am confident our business is well positioned for organic growth.
We have a simplified operating model and clear strategic focus to support Australians throughout their wealth journey and particularly in retirement. This continues our 175-year legacy of helping people create their tomorrow. I would like to thank my fellow directors, the executive committee, and all our dedicated employees for their hard work. To our shareholders, your continued support is invaluable and greatly appreciated. Before I conclude, I would like to say a few words ahead of standing for re-election to the board as part of today's proceedings. I have been on the board since July 2021, taking on the role of Chair in April 2024. As I have outlined, it has been a period of transformation and repositioning, and we are now determined to drive growth across our businesses.
As well as a long executive career in financial services, specifically retail banking, treasury, and wealth management, I've also been on external boards since 1987. As you would imagine, I've seen a lot of change over that period and navigated the many ups and downs the economy and markets have experienced. I continue to have great pride in the strength of the industry in Australia. Having sat on a number of industry boards and groups, including as a member of the Financial Sector Advisory Council and as Deputy Chair of the Australian Bankers Association, I see the benefit that a competitive and innovative financial services industry can have for our economy. I've been proud to serve on the AMP board through a period of significant transformation and believe AMP has made good progress in best positioning the business for the growth opportunities ahead.
It is a privilege to be on the AMP board, and I would be honored to continue to serve should the shareholders see fit. Thank you. I will now hand over to Alexis.
Thanks very much, Mike, and good morning. I'm very pleased to be addressing you, our shareholders, today as we move to a new era for AMP and a reorientation towards growing the business. We have a clear vision to be the place where customers can come to plan for the next phase of their lives being retirement. We continue to deliver to that vision with innovative lifetime solutions, the introduction of digital advice, and the launch of Citra, our lifestyle app aimed at over 50-year-olds. Over the last year at AMP, we've continued to reshape the portfolio with the sale of our advice licensee business.
We've also simplified the operating model, particularly in the corporate center, and have a clearly defined strategy for the core businesses that remain within our portfolio. While growth is critical, we cannot lose sight of the fact that we operate in an ever-changing environment where simplifying and driving operational efficiency must be a core component of our DNA. The market remains competitive and dynamic, and we need to operate that way too. Reviewing our 2024 results, you can see that we continued to deliver on our promises. All our wealth businesses demonstrated improvements in cash flow, the position in AMP Bank was stabilized, we completed our capital return program, and we delivered on our cost targets in an inflationary environment. On top of this, we continued on the journey of improving our reputation and increased customer satisfaction. Now coming to our businesses.
In our platform's business, underlying net profit increased almost 19%, driven by strong momentum in cash flows, positive markets, and ongoing discipline around costs. We signed nearly 100 new distribution agreements with advisor groups during the year and secured around 140 net new advisors with funds over AUD 1 million on our North platform. These advisors are active contributors of flows and clients. In super and investments, we're also delivering improvements in cash flows. This is supported by our strengthened proposition to members, which includes good returns, a valued insurance offer, and competitive fees, together with our improving reputation. Our recently launched digital advice offering is already gaining interest, with over 2,200 members accessing the retirement health check and over half of those receiving advice on retirement income projection, a retirement income score, and their general age pension entitlements.
During the year, we consciously managed the loan book in the bank with subdued growth as a result of prioritizing margin. We launched our new digital bank on time and on budget and continue to roll out new features to the market. Our New Zealand business has again delivered a steady performance despite the challenging economic environment in that country. This is due, in part, to the focus on diversification of the revenue base over a number of years in order to reduce risk. Our partnerships also made a strong contribution in 2024. In December, we completed the advice transaction, building a partnership with leading advice services provider Entirety. The partnership allows us to maintain close relationships with advisors and to continue to involve them in our product development and innovative initiatives.
We also carefully managed costs during the year, delivering a 6.1% reduction in an environment where inflation remained high. This drive for continuous improvement in our operating model needs to be relentless. While we are making good progress on our business priorities, there remains much uncertainty in the macroeconomic environment, and this has been reflected in volatility in our share price and the share market. Our business is in good shape to withstand and navigate this volatility, and it won't distract us from our short, medium, and long-term priorities. Since becoming CEO in August 2021, my goal has been to ensure AMP's long-term sustainable performance. We've focused on what we can control, leading to steady improvements in underlying NPAT and earnings per share over the last three years.
Earnings per share also benefited from a 22% reduction in shares due to our on-market share buyback, part of our AUD 1.1 billion capital return program. Profit, EPS, and our cost to income are the measures that will drive the future growth of AMP, and we believe focusing on them as well as focusing on our customers is what will allow us to deliver increased value for shareholders. Having laid the groundwork and reshaped the business over recent years, our vision is for AMP to be the place that Australians come to get confidence in their retirement. This vision is evident throughout AMP. We're delivering innovative retirement solutions to help Australians retire with confidence through both our platforms and super businesses.
In the coming weeks, our bank will launch a new offering that will provide retirees greater flexibility with their cash flow to help them enjoy the early and active years of retirement even more. Meanwhile, our lifestyle app, Citra, is supporting the social side of retirement with an online community of 260,000 members, including 14,000 Citro car holders who have access to rewards and weekly deals. It is this focus on retirement that sets AMP apart from our competitors and is also a strong part of our heritage. Since last year's meeting, the environment remains tough for our people, customers, and members. Households in Australia face higher costs for mortgages, rent, energy, and groceries. Despite recent improvements in interest rates and inflation, we must continue supporting customers. Our research shows two-thirds of Australians are under financial pressure. We need to help them balance increased costs without compromising long-term financial planning.
In 2024, we supported 191 vulnerable customers through Good Shepherd, trained 116 staff to assist distressed customers, and helped 4,800 members access AUD 62 million in super on compassionate or hardship grounds. Our customer satisfaction score rose to 7.9, reflecting our commitment to delivering for our customers. As I mentioned earlier, the world continues to change at a rapid rate. It's clear that artificial intelligence, or AI, offers significant opportunities to help us deliver on our purpose and support our customers and members. Our priority has been to establish an AI center of excellence and set governance processes. With these in place, we're deploying AI to assist our frontline teams. We launched an AI assistant for our super contact center teams and will expand it to other contact centers. We're also providing an assistant for advisors on our North Platform for client reviews.
There's considerable scope for us to continue to innovate in this space, and I'm excited about what we'll be able to achieve while maintaining strong governance. Looking ahead, our clear priority is to build on the growth momentum we're seeing in our wealth businesses. While these businesses will always be impacted by market movements, we are focused on developing functionality that supports advisor growth and delivers on that specialism of retirement. This year, we're also executing on our new digital bank. Of course, while we're driving growth, we also need to maintain operational and capital efficiency, which remain a priority for me and for management. Together, all of this will help us to continue to deliver on our purpose, helping people create their tomorrow and delivering value to you, our shareholders. Thank you.
Thank you, Alexis. We now turn to the formal business of the meeting.
The first item is to receive and consider the financial report, director's report, and auditor's report for the year ended 31 December 2024. There is no vote on this item. These statements and reports are published in the annual report, which was lodged with the ASX on 14 February 2025. The purpose of this item is to provide the opportunity for shareholders to ask questions about these reports, as well as the general business of the company. Shareholders may also ask our auditor, Ernst & Young, any questions relating to the conduct of the audit and the auditor's report. All questions to the auditor should be addressed to me as Chair, and if appropriate, I will ask Anita as the EY Lead Audit Partner representative to address the meeting. I'll now take questions and comments on our financial report and director's and auditor's reports on the management of AMP.
Please note that we will focus specifically on the remuneration report later in the meeting. As David mentioned earlier, I'll answer questions received before today's meeting and from the online platform first. David, could you please read out the questions?
Chair, we have a question from Mr. Duggan. We have had several questions on diversity, including what percentage of management is female compared to the company overall, and what steps are being taken to increase diversity in the leadership team to ensure more women in senior roles.
Thank you, Mr. Duggan. If I have a look at the executive committee to start with, the female representation on the executive committee is 66%. The female representation across the company is 50.2%, and in management generally, it's 40%. It complies with our 40-40-20 requirement.
Chair, we have a question from Mr. O'Sullivan.
Is AMP looking to acquire further assets, i.e., banking, etc., since its restructure and sale of assets?
Thank you, Mr. O'Sullivan. Look, it is incumbent upon management of the board to be continually scanning the horizon to see what opportunities there are out there. Whilst we do not have any current ideas in respect of mergers and acquisitions, we certainly always keep a weather eye out to see if any opportunities might pop up.
Chair, we have a question from Mr. Saroni. I have a small shareholding. It is expensive to sell shares. Would you consider buying them back or conducting an unmarketable parcel share sale facility?
Thanks, Mr. Saroni. We certainly are continually looking at the structure of the register, the cost of the register.
It's fair to say there's as many people who want to retain their shareholdings that are small as there are who are prepared to sell them, but it is something that's continually under notice.
Chair, we had a range of questions pre-meeting on share price performance. What action is being taken to restore value for shareholders?
I think if we have a look at the share price performance, we can just run through the numbers to make sure that everybody's on the same page. At 1 January 2024, the share price was AUD 0.93. At the AGM that year in April, it was AUD 1.19, so it had picked up reasonably. By the end of the year in December, it was AUD 1.59, so it had gone up by 71% over the year.
Leading into the profit announcement, it actually ran up fairly hard, probably on the back of general expectation around the year's performance, but also on the fact that one of our larger competitors was in play and peaked at AUD 1.75. After the profit announcement, it went to AUD 1.49, so it was down about 13% on the back of that. That was pretty consistent with every other company in Australia that met its guidance for the year. This year, volatility around profit announcements was the highest it has ever been at 20%. Unless you really shot the lights out, generally you ended up with a fall in the share price. Today, it sits around, is it open? It is probably around AUD 1.10-AUD 1.15, something like that.
Clearly, the fall between the end of the profit season and today is just general market malaise with a little bit of help from our mate in America.
Chair, we have a question from Mr. Martin. If the board actually returned AUD 1.1 billion to shareholders since August 2022, where is it?
If you have a look at the balance sheet, you will see that it is an increase in the number or the amount of assets, net assets across the number of shares we hold. Each individual shareholding has risen in value as a result of that capital return.
Chair, we have a question from Mr. Cornell. Why did the board decide to sell AMP Capital?
If you think back to 2021 when all this sort of kicked off, the original plan was to de-merge the capital business from the business that is AMP today.
The main reason for that was the capital business was essentially a private equity business. In terms of its suitability, complementarity to the retail business, it really was not there. Different cultures, different motivations. The capital business was originally established to support the flow of funds through the life company. Once the life company went, there really was not the same ability to access funds to drive that business. That was the reason that it got sold. I think it is important for everybody to understand that the value of that business went up and down in a lift every single day. We could have easily got nothing for that business as we got AUD 1.7 billion.
In my opinion, it was a fantastic effort on behalf of management to realise such a great price for a business that really was based on the capital of the people employed in it.
Chair, we have a question from Mr. Hyder. Why do you allow dividend reinvestment when you are buying back shares? Also, why offer options to directors when you're buying back shares?
Thanks, Mr. Hyder. That's a reasonable question. The reality is that there are people who still want to build their shareholding through dividend reinvestment. Any dividend reinvestment is neutralised by us buying shares in the market. There's no dilution in that respect, which I think is the point of Mr. Hyder's question. In respect of options for directors, the only options that are offered are to the CEO as part of her annual remuneration contract.
Chair, we have a question from Captain Perrott. The shares should be much higher, which points to the company not being run correctly. The board must be changed or the company must be taken over and sold off. It cannot continue like this. All right, I'll take that as a comment. He's entitled to his opinion.
Chair, we have a question from Ms. Wynne. What are you doing to mitigate climate change?
Climate change is obviously something that's very important, not just to AMP, but to the community at large. Our approach is on a couple of fronts. One is in our investment business. We obviously do all the work to ensure the companies we're investing in are taking appropriate action as per the Climate 100 requirements, and we vote accordingly. In respect of our own business, we're now carbon neutral.
We make sure that whatever investments we make and how we operate through our lending and other policies have an eye to climate change. If you want to read our sustainability report, which is available on the net, you will see that it is a very thorough approach. In terms of ratings of sustainability across companies, we are in the top quartile.
Chair, we have a question from Mrs. Haysom. What steps are being taken to reduce insurance costs for customers?
Insurance is a very important part of people's superannuation and obviously protecting their assets and their income as they move towards retirement. In the last 12 months, we have done a complete refresh of the insurance offering in our superannuation product. We have changed providers, and we now have market-leading insurance premiums and offerings through our superannuation fund.
Chair, we have a question from Mr. Fulford.
When will the dividends be fully franked? When are earnings to be increased? How can the directors make the share price more attractive?
Okay, Mr. Fulford, the dividends will be fully franked when we start paying tax again. As we move through the period from 2017 post-Royal Commission, we all know that there were times when the company did not make a profit. We have got significant deferred tax assets sitting on the balance sheet that will be utilized as we move forward. That comes to point number two. As earnings increase, those deferred tax assets will be used up. The good news about that is we are not paying tax on those earnings going forward. Once we start paying tax again, the dividends will then begin to be franked again. I think the third question is obviously one that exercises directors' minds all the time.
I believe that in the last three years, the simplification of the business and the job that Lexa and her executive team have done in both undertaking that simplification, but more importantly, in sharpening the strategic focus of the business towards providing top-quality retirement and wealth management products, enables us to grow our earnings, to grow the business, and therefore make the share price more attractive.
Chair, we have a question from Howard Pesco Consulting Pty Ltd. What is the impact of Donald Trump upon your business?
I could go anywhere with this. Look, we all know the volatility that we have seen in the markets over the, really since his election, to be honest. I guess the most obvious impact, not necessarily from Donald Trump, but from market volatility, is the stock that we have in our superannuation platform and the North Platform goes up and down.
That has a direct correlation to the amount of money that's earned on those platforms. As the market rises, the revenue rises in accordance with that. Of course, the opposite's true. Market volatility at this level is probably not that good for anyone unless you happen to get the advice that the tariffs were going to be reversed two years before it was announced. I think the point I made in my speech that most people are really invested for the long-term holds. There's always going to be periods of volatility. As unnerving and as worrying as that might be, I think if you take a long-term view of these things, invariably you end up doing better than those that get too worried and move to cash.
Chair, we have a question from Ms. Cripps.
What is the management expense ratio for FY23 compared to FY24?
I think the management expense ratio is something that's more normally associated with managed funds and life companies, etc. I assume that Ms. Cripps is talking about the cost-to-income ratio, which, as you know, we've just added to our STI scorecard in considering what bonuses, etc., need to be made. The cost-to-income ratio in 2023 was 66.5%, and in last year it was 63.8%. That's probably still too high, and we are targeting to get that lower by both growing the revenue of the business, but also by making sure that the cost base is appropriate for the size of the business.
Chair, we have a further question from Ms. Cripps. How many non-disclosure agreements did AMP sign in FY23 and FY24?
Look, I'm not aware of the exact number that would have been signed, and I'm not exactly sure what the point of the question is. I mean, businesses sign non-disclosure agreements all the time around a whole lot of different things. By their very nature, you're not allowed to disclose too much about them. I think that's the best I can do.
Chair, we have a question from Mr. Cowerman. My super, as well as personal shares, are with AMP, and I hold shares in other companies as well. All my shares have recovered back to pre-COVID levels except AMP. When and what's going on to get the value back to where it was? Maybe we need new directors.
I think the key point about the timing in that question is we're talking about pre-COVID levels.
Pre-COVID, AMP was a very different business than what it is today. We have sold AMP Capital through that period. That was probably at the tail end of selling the life business. You are comparing apples and oranges when you are thinking about the share price of the business in those two periods. In that time, we have repaid AUD 1.1 billion in capital to shareholders, and there has been a significant increase in the value of the company through that period.
Chair, we have a further question from Mr. Duggan. Do all companies think that everybody can do things online? Do you cater for old people who want to do everything in written form?
Look, that is a question that has been faced right across a whole lot of businesses. It is difficult for customers, especially those customers that are older. It is a conversation I have with my mum reasonably often.
It is a problem for businesses too, to be able to invest in digital platforms and other things, which, like it or not, is really what most people want these days, whilst maintaining those other processes, which are often a lot less efficient. We do our best to ensure that we service our customers as they wish to be serviced. I think our customer service has been on the improve for quite some period of time, as has our reputation. Yeah, it is a difficult situation most businesses and a lot of people find themselves in.
Chair, we have a question from Mr. Barber. Can we get more youth with new ideas on our board as we are stagnating as a business?
I think that question really goes to the diversity of board and diversity of management.
It's not necessarily that youth are the custodians of all new ideas. I think if you have a look at the innovations that have come through AMP in the last little bit with Citro, with the credit card, which is the first credit card in Australia to have no numbers on it, with some of the offerings through our North platform, there's plenty of innovation occurring across the company. I don't think we lack for new ideas. Diversity in experience, diversity of thought, diversity of background are all important, and it's something that we continue to test ourselves on and will continue to seek out.
Chair, we have a question from Mr. Smith. Why don't you all resign and install an administrator to cut out the dead wood from top to bottom and start again? Make AMP great again.
I don't know if this is a franchise of the other MAGA model, but I'll take that as a comment. Chair, we have a question from Mr. Thorne. Should AMP invest in low-cost subsidised rental properties in Australia in major cities to tackle the current housing shortage? Look, I'm clearly not going to get involved in investment decisions, and nor should anybody else on the board. The housing crisis in Australia is a very real crisis, and it needs to be addressed through cooperation between government, industry, and those who have the cash to invest in it. I'm sure our investment people look at all different sorts of opportunities, and if there's one that makes sense in that sector, I would imagine they would avail themselves of it.
Chair, we have a question from Mr. Taylor.
Would the company please provide details of all donations paid to organisations, charities, and political parties?
I'll start at the back and work from there. In terms of political donations, we do not make donations to political parties per se. We do send people to attend policy forums and other forums that are organised by political parties. Last year, we spent about AUD 40,000 doing that. In terms of donations to charities and organisations, between the company and our staff, we donated about AUD 970,000 to various charities and other organisations during the year. Of course, the AMP Foundation makes a significantly greater contribution than that to a whole lot of organisations, and their report comes out each year, and it is well worth a read. They do some fantastic work supporting people who are really keen to make our community a better one.
Chair, we have a question from Mr.
Fisk in relation to the current dividend. Given all the disappointment AMP shareholders have experienced over the years regarding the declining share price and given the reduced number of shares due to the recent share buyback, how could you possibly reduce the current low dividend by 50%? Incredibly poor treatment of long-suffering shareholders.
I alluded to this in my speech at the start, and capital management is one of the key obligations and responsibilities of the board. When we sat down to consider the dividend for the full year, there was very clearly some uncertainty in the world, which, as it's turned out, has played out.
We thought that it was prudent to reduce the full-year dividend to AUD 0.01 to make sure that we were more than able to meet the credential requirements we had for capital and the liquidity requirements we might need in an uncertain world. In 2025, we are targeting a return to AUD 0.02 per half, and hopefully things will play out to ensure that we can do that.
Chair, we have a question from Mr. Wilson in relation to diversity. It is disappointing that the company clings to the concept of diversity rather than employing the most competent and skilled. While diversity allows the board to feel good, it comes at the expense of results and shareholder value and continued poor performance.
Whilst that is a comment rather than a question, I will just make the comment that that statement implies that you can't get competent and skilled people and have diversity. I don't think those things are mutually exclusive. I think that diversity, and in particular diversity of thought, when coupled with outstanding people who perform well, adds a hell of a lot to an organisation. Yes, diversity for diversity's sake is not necessarily something that we would pursue, but we certainly pursue diversity coupled with strong competence and skills in the areas we need.
Chair, there's no further online questions for this item at this time.
As there are no further questions received prior to the meeting or online, I will now take questions from the auditorium. Please proceed to one of the microphone attendants if you have a question.
There are some questions, so I'll take the first question from microphone two.
Chair, I would like to welcome and introduce Associate Professor Dr. Andrew Schmulo.
Good morning, Chair. In your annual report, you said, and I quote, "We are proud of the returns we've delivered for our superannuation members." End quote. Notwithstanding the fact that you have hundreds of funds under management, APRA's recent heat map revealed that 36 of 37 failed and chronically underperforming funds were AMP subsidiaries. This staggering succession of failures has caused detriment to 17,000 members with AUD 1.8 billion in retirement savings. My question, and please focus on the question, how can you claim the barest measure of credibility talking about being in the top quartile when, in fact, an independent arm's-length government regulator has identified your funds as the dogs of the industry? That's my first question.
I'll deal with that question first. The majority of our funds are held, or our members' funds are held in other accounts. Our major superannuation account, our MySuper account, returned 15% for the year and put it amongst the top-performing funds. In respect of the funds that you were talking about in the annual performance test, those results reflect a very small cohort of funds. In fact, the majority of superannuation funds are not part of that test. It is confined to a very few number of funds mainly held by ourselves and Insignia. When you have a flawed cohort to deal with, you get flawed results. If most of the funds come from two providers and are owning a small portion of those funds that are being tested, you end up in the situation you do.
At some point, Insignia may well be out of that and will be testing a series of funds against ourselves. Of course, half of them will fail and half of them won't. The real question in all of that is what's in the members' best interests in terms of the outcome of that test and what has to happen. It is not crystal clear that closing those funds and moving those people because of tax reasons and other reasons are in the members' best interests. I implore you to go and have a look at that test, have a look at the cohort, have a look at who qualifies to be in that, compare that to the total universe of funds available, and you might see that it's not statistically valid.
Right. It is APRA's fault. Exactly.
Actually, it's the fault of the people that wrote that legislation. APRA just have the unfortunate task of administering it.
Can you name one instance where you pushed for executive accountability or challenged board consensus to protect shareholder interests, or are there no such examples during your time?
There's certainly plenty of examples of that. Naturally, whatever goes on in the boardroom stays in the boardroom. If you read our report, our sustainability report and our remuneration report, you'll see those instances have occurred, and they will continue to occur because it's incumbent upon us as a board under legislation and prudential obligations to make sure that happens. Go to microphone one.
Thank you, Chair. I'd like to introduce Mr. Sanderson.
G'day, board. I apologize for not getting here last year. We missed you. I'm sure you did. You weren't even here.
I've got a question that relates to the clarification of the financial report, and it goes to the heart of cost of living, profit gouging, honesty in lending. I did put this question to Alexis two years ago, but she went into the fog of banking and really didn't get to the question I was asking. When AMP, an authorised deposit-taking institution, otherwise known as ADI, creates a loan, it simultaneously creates a matching deposit through an accounting entry, essentially from nothing, via keystrokes. This process does not require a real depositor or external funds. Aside from capital adequacy requirements as enforced by APRA and the operational costs, there are no direct funding costs at this point of loan origination. When a borrower draws down the loan, for example, to purchase a home, the lender may incur short-term settlement obligations, typically influenced by the RBA cash rate.
However, once payment is settled, for example, via the exchange settlement account, the transaction concludes with the bank holding a loan, an interest-earning asset, and a loan-linked deposit, a liability. At this point, the core transaction is complete. Any subsequent actions, such as raising funds through wholesale markets or securitization, are optional funding strategies, not a requirement of the initial loan creation. Therefore, the specific loan's initial funding cost is zero. No external deposits or wholesale borrowings have been raised to fund the loan. The loan has not been securitized at this point. Despite this, the ADIs routinely adjust variable mortgage rates in line with movements with the RBA cash rate throughout the life of the loan. This creates a pricing illusion that loan interest rates must rise due to a cost pressure that did not exist at inception and may never exist in practice.
My questions are, where are these loan-linked deposits represented in the AMP balance sheet? Can the board explain why interest rates on loans funded by deposits created by an ADI itself are increased in line with cash rate movements? Shouldn't pricing reflect actual input costs rather than opportunistic alignment with benchmark rates that do not apply to the original transaction? Is it fair, appropriate, transparent, or honest to cite funding cost pressures as the justification to raise rates when there is no existing primary act of a loan origination? I apologize for the length of the question, but I— No, that's fine.
I understand there's really two questions there. One is, how does the balance sheet management work?
The second one is, why are home loan rates tied to the cash rate when there really isn't a correlation between those two things, both on a yield curve basis, but also— the transaction? Pardon? Talking about the primary transaction or securitised before you go to the market. That is a balance sheet management issue, right? If you think about banks, banks have two key things that they need to do in respect to the question that you've asked. The first is most loans, and let's just talk about home loans because you've been talking about securitization, etc. Most home loans are 25 or 30 years. There is no such thing as a 25-year or 30-year term deposit.
One of the main functions that banks perform in the economy is something called maturity transformation, where they take the maturity of a short-term deposit, and the term deposit market in Australia, essentially the majority of it falls into 12 months and below, take those deposits and fund 30-year loans. Let me finish. It is very clear that at inception, there is no link between an individual deposit and a loan because they cannot be. They are not for the same term. This comes to the concept of banks managing a pool of funds. They have funds from capital, they have funds from money markets, they have funds from bond issues, they have funds from retail depositors. All those funds come together, and on the other side, we have all these assets that come together.
There isn't a one-for-one relationship between any deposit and any loan because they can't be. They aren't on the same terms. That, I think, answers your first question.
It doesn't. You've gone past the original transaction. You've gone into money markets and you've gone to securitization. I'm asking you, when you originally create the loan, you create the deposit, you create the loan. You have to hold a certain amount of security, approximately 10%, as designated by APRA. What you do past that is what you're talking about.
There is no link upfront between any particular deposit and any particular loan. Now, let me go to the second question, which talks about why are home loan rates tied to the cash rate and should they be? Clearly, the answer is they shouldn't be because not every loan is overnight.
As I said, they're 25, 30-year maturities. However, what happened in the 1990s is something called securitisation came along. John Simon, to his eternal credit, managed to put a product into the market that relied on securitisation. In that instance, there is a direct link between the funding and the loan. Most of that funding in securitisation is off the back of 30, 60, or 90-day bonds, and they repriced every 30, 60, or 90 days. He had a direct correlation essentially between the cash rate, ignoring the overnight to 30 days and the cash to bills associated with that, and started pricing based on that. At that point in time, rates were falling. He was able to put loans out there at a much cheaper rate, whereas all the banks were still operating off the full model.
To compete, overnight, David Murray cut the margin on home loans in half because in a falling rate environment, he had to do that to remain competitive. That then resulted in everybody starting to price at the same way that securitisation prices and repricing overnight. During the global financial crisis, this became a real issue. ANZ, to their credit, tried to break away from overnight repricing and price off the appropriate cost of funds relative to their balance sheet. They got crucified. It all went back to where it is. It's an accident of history. It sets up difficulties for banks in terms of being able to manage that cash to bill spread, especially when they have to think about the different maturity profile that they have over their deposit and liability base, but it is what it is.
With respect, I think you've gone past my original question, but we'll leave to that. I just have a quick follow-up. When AMP securitises a loan, is it not the case that the primary responsibility is transferred to the purchaser of the security and away from the customer? So what I'm saying there is you go out, a customer borrows money from you, that's what they have to do. You securitise that loan. If push comes to shove and you have to choose between the purchaser of the security and the borrower, where are your allegiance?
No, it just comes down to whether or not the loan's current, right? It doesn't matter if it's on the balance sheet or if it's off the balance sheet.
The fact is that AMP's servicing that loan, managing that loan, and if that loan falls into arrears and requires action, will AMP have to undertake that? And that's all in the contract between the borrower and the lender. Okay. I've got another question, but it's a long answer. Yeah, we might move on. Where are we going? Microphone two.
Chair, I would like to introduce Mr. Peter Star.
Good morning, Mike. Good morning, Alexis and the board. And to the mum and dad shareholders in the room and those people who have their super with AMP. I'd just like to—I should note that on the 18th of March at the banking summit, the regulator, Mr. John Lonsdale, who I spoke with, talked about governance issues, talked about boards, and talked about that boards need to be more accountable.
Accountable and listening when they're told something and make certain things are right. Mike, you talked about the performance of the company. Week to week, we're down 4.85%. On a monthly basis, we're down 13.27%. On a yearly basis, we're down 28.86%. There was a time when these shares were well over the AUD 10 mark. We've floated in the last five years between 60 cents, 40 cents, got as high as AUD 1.75, even got to 2, came back. By any accountable measure for the mum and dad shareholders and the shareholders I represent, the board ought to hang their head in shame because it's an absolute bloody disgrace. Instead of making headlines for the right reason, this company makes headlines for all the wrong reasons.
In God's name, who decided we'd have cameras in people's homes and all that nonsense going on and all that publicity that went with it? I just don't understand that. The board and the executive team, and this company isn't immune from it because there have been a number of executives who, to quote John Lonsdale, who've gone from the bedroom to the boardroom nonsense because this company wasn't exempt from that. We got rid of a number of executives. The mum and dad shareholders and the shareholders I represent, we want to see good returns. We want to see the share price going where it should be, and none of this nonsense. My question to you, Mike, is what are you going to do so we're not having this sort of nonsense go on? That's my question to you. All right. Thank you.
Let's talk about the share price performance to start with. If you look at the company since we have sold AMP Capital and selected the businesses that we want to take forward, the share price has increased. Yes, it has been down since the profit announcement, but so has the whole market. If I take your numbers and I look at a— That's not 100-year loan. Yeah, but if I look at an 18-month period, it is 41% up. You can be selective about the periods you want to pick, but you need to look at the long term.
For us, the long term is since we've simplified the business by getting rid of or by divesting AMP Capital, the life company went before my time, but since that went, you have to judge it based on the company that we have today and the company that we've taken forward. In that period of time, the share price is demonstrably up. In respect of the other issues that you raise, I'm not sure necessarily what you mean by the bedroom to the boardroom, but perhaps that—Don't quote John Lonsdale. Would you know what he meant? Because I'm not sure. The only thing I can think is that that means moving from executive onto the board. That isn't a practice that we would allow or consider, and it's not something that we do.
Your final point around the cameras and other things, the basis of that issue was us wanting to modernize the contracts for our employees. They had not been modernized for a very long time. It was as much for the benefit of the employees as what it is for us. The beat-up around putting cameras in people's houses was, frankly, ridiculous. There is no doubt that in this time, there has to be surveillance over what is going across people's computers. You only need to look at what happens with phishing, cyberattacks, DDoS events, etc. If you are not very closely monitoring all the flows in and out of your business in a transactional sense, you are leaving yourself open. In fact, you would be breaking the law if you were not doing that. That is at the heart of what we are talking about.
I'm at a loss to know how you could put a camera into someone's house without their permission. I just don't see how that's possible. I think it was very irresponsible of those that put that story out there, including the journalist. It had other ramifications that people don't know about. It's appalling.
If that's the case, Mike, I didn't see any statement from you as the Chair of AMP or Alexis come out and kill that and get on the front foot. That's the difference. The other thing we might want to think about, the board wants to think about, is I know this work from home and it's a huge issue, and I can understand for women who have young children and things.
I don't have an issue with people working from home, but I think there needs to be the balance, as Matt Comyn said, who's the CEO of the Commonwealth Bank of Australia, that you need to have that balance right where you have people coming into the office and not five days at home. I think that's the problem here that all companies are facing. I think that especially either Alexis or yourself should have been on the front foot because that story didn't just go one day. It revolved around for a number of weeks. It doesn't make the company look good in the eyes of the shareholders, and it doesn't help create value when you've got that going on.
Yeah, look, there's judgments to be made about whether or not you pursue those sorts of things through the press.
I think you can light a fire under something that would otherwise go away when you do that. You stand to be judged by what does and doesn't happen. In respect of the working from home, look, there's a whole lot of different arguments around that. It's a great thing for families with young kids. It helps them out significantly in being able to manage their days. As long as you can measure the productivity and make sure you're getting the throughput that you're paying for, then I think that's fine. It's a disadvantage for young kids coming into the workforce because they haven't got people to learn from. You learn so much stuff at university or at school, but you don't really understand how to operate in a business environment unless you're actually in one. There are disadvantages for them. There's a happy medium to be found.
I'm not sure whether or not everybody's arrived at that yet. We have a policy that requires people to come in, I think, eight days. Two days a week. Two days a week. That is where it is. It works for some people. It doesn't work for other people. To the extent that the productivity can be measured and the business can be assured it's getting value for the money it's paying, I think that we'll learn to live with this new world. Okay. Just one last thing on that. I get that and understand that. Let me tell you, before COVID, we had everybody in the office, okay? Yeah.
I understand COVID and then people had to work from home. You couldn't travel. I couldn't get to my office at Darling Park for eight months.
I got to move it and set it up in my home. I get that. COVID's gone and passed. I think we need to have—I have no issue with the people, but you've got to have it so it's, I guess, to quote Matt Commons, it's got to be—I think some people take the piss out of it. You know what I mean? Yeah.
Thank you. Microphone one.
Thank you, Chair. I'd like to introduce Mr. Kneznikov.
Thank you, Mr. Chairman, for your and your board hard work. I'm a long-term shareholder and represent a number of entities who are also long-term shareholders of this company. Those entities include my self-managed super fund, propriety limited company, partnership, and personal shareholdings.
I would like to raise some issues with our company that doesn't make any sense, and I would like to have some answer before we go into vote for adoption of the renovation report, as it will affect my and other shareholders on the way we're going to vote. I have raised this issue at a couple of our last AGMs in previous years and was promised solutions soon, but nothing had happened since. I can understand why this company needed to pay commission with our money to a financial advisor to open a new term deposit for a non-personal entity. It's just a waste of money. I'm referring to the fact that many banks refuse to transfer money to financial advisors for scam problems.
I'm also talking referring to the fact that for a self-managed super fund, I need approval from all members and meaning their approval to appoint a financial advisor and approval to transfer funds money to an appointed financial advisor. Can you provide the date that all this madness will be finished? In your opening speech, you mentioned competitive banking, but you are not competitive at all. You are lagging in all aspects of today's banking. As for our share price, it wasn't sure. We're trading at AUD 1.12 now after seeing AUD 1.76 a couple of months ago. Thank you. Thank you.
The first question around commission to brokers, I think the reality for us is that we don't have a branch distribution network. We have to operate through other distribution networks. To gain access to those distribution networks, you obviously have to pay.
We pay a commission for the work that those people do for distributing our product. We save on not having the branch network, but the cost to acquire customers and funds is in that broker payment, that commission payment. That is just the model that we have. When the bank was established, it was decided that they would operate through third-party distribution, and that has been very successful for a lot of businesses. In fact, the mortgage market in Australia, 76% of all new mortgages are originated through brokers now. Even those who have big branch distribution networks are significant users and pay commission to brokers. In terms of the scams, it is a difficult situation that the community finds itself in.
We, together with the ABA and all banks and financial services companies in Australia, are very invested in trying to reduce the amount of scams that go on. There has been a lot of work gone into that. With our new banking platform that we are establishing through Starling, the amount of capability that we have to deal with scams is greatly enhanced, and we will continue to make sure that we do what we can in that space because it does not work for the customer. It does not work for us when we have to chase everything up. It goes to reputation of the industry and other things, and so it will just have to be invested. You know why bank branches do not get robbed anymore? Because it is easier to do it online. It is just the way it is transferred.
I think, and then in terms of the share price, yes, we did hit a peak of AUD 1.75. In my personal opinion, that run-up going into the profit announcement was probably a little bit too aggressive. I think we were more comfortable around the end-of-year price. If you look at the performance over the year till today, it's gone from 93 cents to AUD 1.12. A lot of the last drawback from about AUD 1.30 to where we are today is purely market sentiment, and it's seen across all parts of the market. Of course, the volatility that we've had this week has been interesting to watch.
What you're saying, Mr. Chairman, we will continue to waste our money with the financial advisors at the time. I can understand to get details. We don't have resources.
After we already have account, we continue going to waste our money to pay to financial advisors. That is what you are saying?
I think you need to think about it in terms of cost transference. If we had our own distribution network and were able to access deposits and loans, etc., through our own distribution network, we would be paying for that. That would be a fixed cost, and it would probably be more expensive for a smaller organization like us to have a fixed cost to do that because it would not always be fully utilized versus the cost of going through third-party distribution, which is a variable cost directly associated to the amount of business you do. I actually think it is a more efficient model for an organization our size.
We get access to a greater range of advisors, a greater range of distribution, both geographically and by number. The cost that we pay for it is directly tied to the amount of business we do.
If I may, Chair, for the simpler accounts, like individual accounts, we can, of course, take all deposits directly, and there is no commission charged in relation to those. I mean, we're continuing to build out that service to go to more complex transactions.
I understand, but I'm talking about waste because if already all the—you have all the details, accounts already open for all the entities, why do I need to go to a financial advisor? Simple question. You have all the data, everything already working.
Why do I need to contact someone in Brisbane to open a new term deposit, which makes my life pretty miserable because, as I explained, I have many members. I need to get them together. I need to put minutes about it. It's a legal requirement, as you're aware of. I'm losing money on top of it. I can't understand. It's just not getting any logic to it. I raised it last year. You promised it will be resolved, Alexis. I'm not sure. Previous Chairman also said it's going to be resolved by creating digital banking specifically for this matter. I raised it the year before. Also, I was promised. It's only empty promises, guys.
I mean, I'd like to understand the individual circumstances, so maybe the head of the bank and I can discuss afterwards because we do accept direct deposits.
There must be a financial advisor somewhere involved there. Of course, in those situations, we have an obligation. Let's talk about it separately afterwards.
Sure. Thank you.
Thank you. Microphone two.
Chair, I would like to introduce Mr. Aravindan.
Hi there. Tivian Aravindan from the Australian Shareholders Association, representing AUD 1.6 million in proxies. I have a few questions regarding net interest margin compression, international partnerships, and emerging risks in microlending. First, I'd like to say that it's great to have increasing digital expertise with Kathleen and Anna in light of recent cyberattacks on superannuation members. My first question is on AMP Bank's net interest margin. It declined from 1.42% in financial year 2023 to 1.26% in financial year 2024. What steps is the board taking to mitigate further margin pressure? Does the board have an internal target range for net interest margin for financial year 2025?
What levers are crucial to achieving that? Yep.
There has been a decline in net interest margin predominantly associated with mortgages over a period of time. It is not just something that we have suffered from. It is something that you have seen right across the market. We are a little bit more exposed on a total basis because we do not have the diversity of lending that some of the other organizations do where the margin has either held or expanded in that space. The main reason, I think, for that is just extreme competition for mortgages because of the capital weighting that they carry under prudential regulation. The return on equity for a mortgage for a long time has been much better than other assets because they are so lowly risk-weighted.
I hazard a guess that there wouldn't be too many organizations actually writing mortgages at the moment at what would be above their cost of capital. At some stage, something's got to give. It's either got to happen through rearranging the way the balance sheet's constructed, rearranging distribution, or just the market deciding to pull back on the hyper-competition that there is at the moment and running at more reasonable levels. The board is obviously very determined to make sure that we do write profitable business. In the last 12 to 24 months, we've held back on growth because at the margin, business is extremely competitive at the moment. We continue to look at different opportunities to be able to increase our margin.
The most obvious one is the new digital bank where we're targeting micro and small businesses, which is a poorly serviced part of the Australian banking sector and always has been. We've partnered with a very successful U.K. bank in establishing a platform for use in Australia. It's entirely digital, so the distribution cost and the cost of acquisition of a customer should be far lower than what we see today. We expect to see some benefit in terms of margin as a result of that investment.
AMP retains significant equity stakes in international partnerships: China Life AMP Asset Management, China Life Pension Company, Mutual Advice Partners. How do you see these partnerships evolving, and are there any plans to leverage them for more for the Australian market or further overseas expansion?
Do you have any—does the board continually review plans to sell down equity stakes in these positions to focus on domestic growth and profitability?
Yeah, with the exception of New Zealand, which we consider to be a very stable and successful business for us, I don't think we would see a lot of opportunity offshore for AMP. We're very much focused on the domestic business and making that business as efficient and profitable and successful as we can. Obviously, we do have those other businesses that you talk about, which are a legacy from times gone by. They do exercise the mind of the board and management, and we continue to explore options there. Having said that, they're all very successful businesses and make good returns.
With AMP's new digital bank targeting small businesses and self-employed customers, what metrics does the board use to gauge success?
Examples include loan growth, deposit pace, or customer satisfaction. What are the emerging risks in microlending that you can see at the moment?
Yeah, obviously, we went through a significant business case before we decided to make that investment. As part of doing that, the plans around growth in terms of deposits, customer numbers, expenses, etc., are all in place. We are measuring the business against that investment proposition that was put forward. Thanks.
Thank you.
Thank you. Microphone one.
Thank you, Chair. I would like to reintroduce Mr. Sanderson.
Hello again. I hope young Jimmy Chalmers, who's listening to this, might like to incorporate it while he's rethinking capitalism. As a small player in the loan market, I'd like AMP's views on a funding proposal designed to give equity with the major banks.
Currently, there are two common frameworks for bank lending: full reserve lending, where an Authorised Deposit-Taking Institution must hold 100% reserves against loans they issue. This is the popular perception out there. Capital-regulated lending, or capital-constrained lending, governed by Basel III, enforced via risk-based capital requirements. This system is in place today, where banks create money through lending, thereby extending money supply. The model I would like AMP to consider is the Chicago Plan. A proposal developed during the Great Depression by the University of Chicago economists Henry Simons and Irving Fisher, and later endorsed in varying forms by Milton Friedman and others. The goal of the plan was to promote financial stability and fairness by removing the ability of private banks to create money. Instead, money creation would become a state function via, in this country, the Reserve Bank of Australia.
Under such a system, ADIs like AMP would borrow funds from the RBA at near-zero interest rates and then on lend to customers. This would level the playing field with the larger banks that currently benefit disproportionately within the current system. Other potential benefits of the Chicago Plan include the elimination of bank runs due to fully reserve deposits, end of private money creation, reduced risk of inflation, credit bubbles, and boom-and-bust lending cycles, greater monetary control and financial stability, and a reduction in complexity. Would AMP agree that a Chicago Plan-based system where private banks no longer create money and the central bank funding supports lending on equal terms would enhance AMP's competitiveness, stability, risk profile, profitability, and shareholder return?
Look, I don't know enough about the model to be able to make a comment, to be honest, but... Pardon?
Is anyone on the board familiar with the Chicago Plan?
No, but we're here to talk about the business of AMP, not a different banking model. Out of interest, I'll go and have a look at it and see what I think, but it's not something that we could do. From what you described, it needs to be done by the government.
I'm sure that the RBA could use Section 39 to get somewhere near it, but it would have to be legislated. Therefore, the reference to young Jimmy.
Yeah. All right. Thanks very much.
Thank you.
Microphone two.
Chair, I would like to introduce Mr. Craig Caulfield.
Good morning, Chairman. Morning, Craig. Just before my question, just on the back of the Australian Shareholders Association, the comments on net interest margin, I'd like to just be a little more granular with that.
You mentioned, Chairman, that net interest margin has compressed a bit more within your bank. Across the industry, I think it's... and that you've referenced that it's across the industry. I don't think that's the proper picture. That's correct, but it's not the full picture, and there's something missing. What's missing is that the net interest margin at AMP within the bank is lower than the net interest margin at ANZ and CBA and Westpac and National Bank and Bank of Queensland and Suncorp and Bendigo. Yeah. AMP Bank is the lowest of the net interest margins.
It's the point I referred to about the diversity of lending. So mortgages, which is the only business we're in, mortgages are the lowest margin-earning business in banking because they attract the lowest capital charge.
In all those other businesses, they have small business lending, they have commercial lending, they have institutional lending, which all attract a higher capital charge. If you're applying more capital against a loan, you have to charge a higher margin. When you add it all up, those that have the higher margin businesses obviously end up with a higher margin than those that only have lower margin businesses. That explains why we have a lower margin because we're only in the capital light business compared to all the other banks.
I do read the annual reports of the other banks, and I do understand what you're saying, the separation between institutional business, residential margins, etc. Nonetheless, what I say still stands, that if we're restricted to ANZ's residential loan mortgages and your residential loan mortgages, your net interest margin is lower.
Yeah, because they are on what's called advanced accreditation, right? Whereas we're on the standardised model, which is how APRA decides how much capital you need to put against each loan. Those that are on advanced accreditation have a lower capital charge against mortgages compared to us. Therefore, they can charge a margin that we have to compete with, and then they make a greater return.
Are you referring to the big four banks?
Yeah, and Macquarie as well are on advanced accreditation.
I would still stand with what I'm saying, and that is look to Suncorp and look to Bendigo, who are on equal footing with you, that are under pressure with their net interest margin, and you're still behind them. It's leading me into my next question, and there's a lot of dissatisfaction in the room.
What AMP, I'm sure you're all seeking to do, is to find some unique selling propositions, bringing in the business bank, the small business bank. That's part of it. That's part of what you're trying to do to differentiate and increase your margins. There are some other things that you can do. An item that I've raised before, but coming back to the... Let me preface it with the world environment of the Trump tariffs, and we're in a very volatile time. You did say the uncertainty settling, but I think that the volatility and uncertainty is going to continue. Think of the people that have mortgages and the cost of living crisis at the moment. I think that AMP's, correct me if I'm wrong, there's a 0.7%, 90 days in arrears rate.
They're increasing across the banks because people have used up their savings over COVID, etc. I am concerned for those people that get behind in their payments through no fault of their own. They lose a job or marriage separation or something like that, how they're being treated. You're trying to position your bank as being as good at or better proposition than the others. It's a competitive environment, as you say. I am incredibly disappointed that Alexis has stopped the model litigant principles. Stopped? Sorry, what did she say? Stopped model litigant principles. Alexis under—let me finish. Alexis under ANZ really well introduced model litigant principles in conjunction with some information from me to protect customers that get into a legal situation with the bank. When you're behind, it is very daunting.
It is a David and Goliath matter, and the banks have all their big lawyers, and it's very hard to comprehend. The minimum that you could do is to say, we will act as model litigants. We will simply act with fairness. It doesn't take away any right. Yes, you have to protect your capital. If unfortunate circumstances occur that you have to repossess, that's part of it. Do it fairly. ANZ's got it, and Alexis introduced it. Bank of Queensland's got it. Suncorp's got it. Bendigo's got it. Westpac's got it. NAB's got it, and CBA's got it. We've got it. I asked you that last year. I asked at the AGM last year. Why couldn't you have given me the decent answer then? Number two, I asked for you to publish it, and I searched your website, and it doesn't appear.
I asked for you to put it up. I did not have the decency of anyone replying to me later to say, yes, we are going to put it up and publish it. If you are a model litigant and you do not publish it, you are hiding behind the scenes. Put it out there, be proud of it, and do not create this disadvantage. Why would people borrow money if everyone can get into a difficult situation?
If I may, Craig, I think we have moved a long way since then. I think customer fairness is part of our values. It is part of everything we do every day. I sat on the hardship line this week and listened to the calls coming through. We treat every customer fairly. We treat every customer with respect and try to help them within the limits of the law.
You know, do I call it model litigant anymore? No, I don't. We call it about the customer principles and our promise to the customer. I think they're laid out very clearly what our promises to the customer are and how we treat them fairly.
I'm certainly confused now. You've said you've got model litigant principles. Now,
I think we have promises to the customer, which in my view are the litigant principles.
Specifically, they come from the government. If you have a fight with Centrelink, there are model litigant principles that have to be followed. You, the banks, are helped by the government. There are implied and explicit guarantees that you get. This is just a decent thing that you can do back to say, if you're in a fight, you know, I was belted over the head at ANZ by your lawyers, by Gadens' lawyers.
It was disgraceful. Every bank that I go to and talk about this, we are decent. We do the right thing. I hear it all the time. AFCA right now has record numbers of complaints. The banks across Australia, record numbers of complaints. This is a very fair and decent thing. Bring in model litigant principles, not just fairness principles. Publish them. No, we have customers.
Okay. We'll look into it. Thank you.
I want you to say yes, you'll publish them. You told me last year you'll look into it. I heard nothing.
I don't think I told you, but... Alexis.
I said last year, Craig, very clearly we have promises to the customer, which we live by every day. That's what I said we had.
I asked last year about model litigant principles. Yeah, all right. Very simple fairness.
One, I want you to, if you can't say it now, I want you to consider it over the next 14 days, and I want you to contact me with what you are doing. I want to see it published. If you write to me and say it's not published, I'll be back on to you through outlets other than yourself.
Okay, thank you very much. Thank you. Microphone one.
Thank you, Chair. I would like to introduce Mrs. Tazwell.
Good day to everyone. I'm just talking about the life insurance. You seem very happy that you're able to get rid of it. My husband joined that in the late 1950s, and at the end of last year, he died, and we haven't had any money yet from the people that took it over. Right. First of all...
I'm just wondering, had AMP kept it, would you have paid more quickly?
First of all, I'm very sorry to hear about your husband. It's a difficult question to answer without knowing all the circumstances of the case.
It's straightforward, very straightforward.
Right. Perhaps could I ask that one of the executives see you after the meeting, and we'll get your details, and we'll see what we can do to assist you. Thank you.
Microphone two.
Chair, I would like to introduce Mr. De Cruz.
Good morning, Mr. Chairman, and thank you very much for this opportunity. I think I'll change the tone of the conversation and as much as all the direct stuff that I'm interested in, but not too much, but go to the general theme of things.
Last year, you were elected Chairman of the Board, and I think it was celebrated or heralded that you had 40 years' experience of whatever you were doing, and therefore was a fine appointment to the chair. That is a general thing for me. I'm not calling about the 40 years' experience except for my own personal one. You had 40 years' experience within the general environment in which you work. I've got more than 40 years' experience exclusively with AMP. Now, one of the things that you say in this is you're offering peace of mind and financial security throughout retirement. I haven't received peace of mind. That is up to me. Or financial security throughout retirement.
I'm not interested in the AUD 236 million that you deadized against AUD 150 million before, nor am I interested in the capital management that has happened, but I look at the governance part of it, and that resonates with me. You say the Board is well placed to perform the important governance role and oversight of the management team in delivering for shareholders. This is an ongoing task that is top of mind for the Board. I would ask, I'm a shareholder, I'm a policyholder, I have been an advisor. Where is the governance that came to me when I asked for it? I asked for it specifically, even though it didn't happen. I mean, you mentioned Mr. Murray, who was chairman at one stage, and I had a lot of time for him except for the time that he was chairman of AMP. That's no reflection on Mr.
Murray. That's my own personal opinion. Because I asked him, I think the CEO at the time was Francesco, but I referred to a CEO before that, Andrew Moore, because I've gone through a lot of CEOs in my time. At one stage, when Mr. Trumbull floated the company, the share price was AUD 10.43. It did go up to AUD 35.32, whatever. That was another thing. I didn't advise my customers when they wanted money from their retirement account. I didn't advise them, but I suggested to them, you've got money in shares. Why don't you sell it? We sold it at AUD 18.78. I've still got mine at AUD 1.11. That's fine. That is my prerogative, and that's what I did. By the same token, when the company comes down the ladder so far, it's a bit hard to take. I will always keep my shares.
I'll get my shares when a broker eventually told me to sell a small parcel for AUD 1.80. I sold because it bothered me so much. Two days later, I went and bought it back for AUD 1.70. I made 10 cents profit and that, okay. I was done. Now that same AUD 1.70 is AUD 1.11 today. That is crazy. Now, you're talking about being in the industry for so long and getting something. There is a thing for advisors to profit from what they call their own superannuation in terms of the cost of the book. The CEO at the time was very ambitious to try and bring forward the grandfathered clauses that the government projected. No, it was the government that did it, not the CEO, but he was very anxious to bring forward by six months his provision to say grandfathered commission is gone.
I started in 1982. I sold products that AMP profited from since 1982. Everything that I sold, even though I got commission, AMP got a client. AMP got business from it. I've still got people ringing me now, even though I'm semi-retired or retired from the business, asking me to help them in terms of their movement into a retirement home because it's a complex business. It's not easy to find out what the costs are. Do you think I can tell them, oh, you don't pay me anything, so I can't help you? I would never do that. I didn't tell them when I sold them a policy in 1982 or 1987 or 1992, oh, 40 years from now, because you don't pay me, I can't service you. I still service them.
My son is in the business, and he's in the business for 25 years, and he's taken over my business. Did I get anything from AMP? Zilch. Nil. Not one brass razzo. I asked AMP. I didn't say I had to have it. I asked AMP. I was sent down from one management to another, and the last one was, okay, you don't get it for your thing because that's going through the class action. That was a great deal we did, isn't it? Class action spent AUD 100 million on whatever we had to not do. I said, okay, but isn't there a provision that said if you're in the business for 15 years or more, you get something as a bonus, as a thing that says, thank you for being in the business for so long?
I've been in there for 40 years, and you celebrated my experience from the 15th, 10th, 20th, 25th, every year up to 35 years. You took all the benefit of mine to the younger people that were there. What have you given me in return? Nothing. This is what I want to bring. When you say governance, governance, ESG is also an Alexis. I wouldn't have brought this into the conversation just now. Just now, a little while ago, she says, we do it for customers. We look after people. If you look after people, I'm standing here, one person to tell you, you haven't looked after me. Thank you.
Thank you. Microphone two.
Chair, I would like to introduce Ms. Julia Anguissano.
Thank you. Finance Secretary and you're representing AMP workers. Thanks. Okay.
AMP is exposing its shareholders to an unacceptable level of risk with its inefficient and questionable employment practices. Chair, a moment ago, you referred to the monitoring and surveillance issue as a beat-up, but the contracts issued by AMP did allow AMP to monitor workers in their home. We all know that today, laptops have webcams that can be used for that type of surveillance. Over the past few years, AMP has committed to the Finance Sector Union that it would bargain for a collective agreement. AMP has now reneged on this commitment. Staff at AMP are now covered by the bare legal minimum paying conditions in the award, a hodgepodge of policies that AMP can change at any time, and an array of different contract documents after AMP failed to have all staff sign their new draconian template contract. This is already leading to industrial disputes.
We have two matters currently before the Fair Work Commission and more are likely to follow. These chaotic employment arrangements not only represent an enormous and ongoing compliance and reputational risk to AMP, but they create a terrible employee experience. There is an opportunity available to AMP today to resolve this contract chaos and create employment arrangements that are ethical and support a sustainable AMP. Will AMP agree to bargain for a collective agreement for its staff?
I think you said those matters are for Fair Work. I think they're best dealt with there. Otherwise, we're prejudicing any discussions that might take place at that panel.
The conversation at the Fair Work Commission in no way would prejudice a simple answer to will AMP negotiate a collective agreement for its staff.
I think it would. Thank you.
I'd take that as a no.
No, you just take it as it's before Fair Work, and that's the appropriate place for it to be dealt with.
Your response to this question in no way would prejudice that.
Thank you. Microphone two.
Chair, I would like to reintroduce Associate Professor Dr. Andrew Schmulo.
Thank you. Before I ask my question, Ms. George, I just point out to you that in the event that AMP is a defendant in litigation brought by, for example, ASIC, you would be the beneficiary of model litigant litigation. You should consider the ethical implications of giving back that which you receive. Mr. Hurst, you said in your answer to the question about political interference that you donate money to charities and other organizations. I can't quite remember whether you used the term organizations or entities, but for purposes of my question, it's a distinction without a difference.
Do those other organizations include the Financial Services Council or the Australian Bankers Association or any other entity that is well known as a lobbyist prowling the halls of Federal Parliament and suborning our democracy?
Clearly we're a member of the Australian Bankers Association, so we pay membership fees.
And they're a lobbyist?
No, we have our own people who look after our interests.
You didn't mention that in your answer, though. You said you make donations to charities and other organizations. You didn't mention that you directly lobby.
It wasn't a question about whether or not I lobby. It was a question about whether or not money was paid to political organizations and what donations were made to the community and how that occurred. Lobbying was never a part of the question, which is why it wasn't mentioned.
Okay, I'm asking you now, do you lobby politicians?
We do. Of course we do. I mean, there's legislation changes all the time. If you have a think about the inquiry that the government's having into small banks, we'd be derelict in our duty if we didn't talk to politicians about what the outcome of that may or may not be. You can't operate in a vacuum from the people who are making the laws of the country. That'd be silly.
That vacuum would include the Australian Bankers Association undermining the Financial Accountability Regime Act to ensure that members who are deemed responsible persons under Section 21 of the Act, that a breach of Section 21 of the Act cannot be brought against an individual. That was at the behest of the Australian Bankers Association and reported in the Sydney Morning Herald.
I put it to you that that suborns democracy, undermines the findings of the Haine Royal Commission, and is antithetical to the principles of executive accountability.
I'm not familiar with the exact example that you're talking about, but I think the Australian Bankers Association is quite entitled to make representations on behalf of their members like any other member of the community is. That's what a democracy is. It's a contest of ideas. It's people working together to get to the best framework and legislation that they can for the community. It's silly to think it should be one-sided either way.
No, Mr. Hurst. Democracy is the right of the majority to govern and the right of the minority to be heard.
Yeah, but it also includes input from everybody. That's what it's about. That's why we have a free country.
This was undermining federal legislation, which had been amended. That Section 21, I'm sure Mr. Cullen advised you on the contents of Section 21 of the Financial Accountability Regime Act. I'm sure he's across it. I'm sure he's across the provisions of Section 83, Subsection 3, Note 2 of that same legislation, and the fact that it made Section 21 null and void.
I think that's your opinion. You're telling me the Australian Bankers Association has a different opinion. Let the best opinion work, Mr. Hurst. Pardon?
This was reported in the Sydney Morning Herald, Mr. Hurst, and the Treasurer didn't deny the allegations.
I fail to see what you're trying to achieve here.
What I'm trying to achieve is to understand the extent to which this firm uses shareholders' funds to suborn democracy. We don't. You said you lobby. We lobby.
We talk to politicians. We talk to the community. We talk to everybody so that we can make fair representations to help build our economy and develop. I mean, I don't really understand how you think it works.
How I think it works, I know how it works, but how I think it should not work is when you're not lobbying politicians to build our economy, lobbying politicians to ensure you enjoy no personal accountability if you turn a blind eye to fraud and theft. Of course, there is a long history in this firm. Charging fees to the dead?
I think that all that was tested through the Royal Commission, and then it went to court. There is a long record of it was proven at the Royal Commission.
There's a long record of what went on there and the processes that failed through that issue. It wasn't a, you know, we're going to sit down and deliberately do this. There were failed processes, and the majority of the things that were uncovered at the Royal Commission were around failed processes. There was a minority of things that were discovered that were poor policy.
Hearst. No, Mr. Hearst. There's evidence at the Royal Commission by Mr. Jack Reagan that AMP lied to the regulator so many times that it lost count. Please don't diminish the poor conduct, the misconduct, and the illegality that your firm engaged in in the past. It's on the public record to attempt to do so is pointless. I didn't. I'll move on to my next question.
That'd be good.
I'll take you back to a rather unfortunate set of circumstances, circumstances which took place when you were on the board, and I'm interested to know what steps you have taken to reform AMP's culture. I refer to the rather unfortunate business with Mr. Bo Pahari, an alleged serial sexual predator. He was a sex worker in this firm with a AUD 50 million handshake. You will recall that because you were on the board.
Actually, I wasn't, but anyway.
You were appointed in July 2021, and he was removed in August 2021.
Yeah, it had all happened before I got there.
He was removed after you joined the board.
Yeah, but all those decisions, discussions, etc., happened before I got there. Okay.
What steps have you taken to ensure that the next sexual predator who prowls the halls and the corridors of your organization does not, A, appoint himself as chair of the Inclusion and Diversity Committee, like Mr. Pahari did, the irony is withering, and that if he has to be sacked for being a serial sexual predator, that there are provisions in the contract to ensure that behavior that is contra bono mores does not result in a AUD 50 million handshake?
All those allegations that you're putting, one would be a bit careful about.
They're on the public record.
I don't think it says anything about him being a sexual predator, does it?
He was disciplined by AMP for sexual harassment. That was reported in the ABC. Right.
That happened prior to my time, as I said.
It's very clear that that sort of, or any sort of behavior, and I'm not saying whether I'm going to behave like they already didn't because I wasn't there and I have never read any reports and I don't know anything about it personally, that sort of behavior is unwarranted, wouldn't be tolerated, is illegal, whatever.
Sure that somebody who behaves that way and has to be dismissed cannot be dismissed with a payout, that your contract specifies that if you engage in behavior that is contra bono mores, that you will not be given a payout if you have to be dismissed.
You seem to know more about his contract than I do, but.
I'm not even a director.
Can I finish the question? Yes, we certainly would not allow anyone who'd done anything illegal to walk away with a payout.
Good to hear.
Thank you.
Chair, I would like to reintroduce Mr. Peter Starr.
Mike, since you opened the door there, I'd like to ask this question, and the question goes to all the board, is, have all the board read the findings of the Haine Royal Commission? Yes or no? You can't ask all the board. I'm asking you as chairman. Yes, I have. Are you able to tell, have the other members of the board read the report of the Haine Royal Commission and what went on?
I don't know, but what's the relevance?
The relevance is this, Mike.
It's very clear that not just AMP, but a lot of financial institutions were doing the wrong thing, you know, and made all the financial people rallied so hard that, no, we don't need it, nothing here to see, but it's all right, you know, we'll charge fees to dead members, you know, keep it going, insurance rorts, bad financial advice, you know. The problem is, is that it's these people in the room that suffer, and the shareholders suffer because of the incompetence of the major financial institutions, and you're one of them. It's our money when you defend these actions and don't do the right thing that costs shareholders, the mom and dads in this room, their dividends. That's appalling. It's absolutely appalling. Yeah, the question is, you talk about model litigant.
That model litigant principle has been adopted, you know, by major, major banks and financial institutions.
Another question?
I'm asking you that you need to adopt that. Right, thank you.
Chair, I would like to reintroduce Mr. Caulfield.
Mr. Caulfield, I'll just let you know, this needs to be a question about AMP's business specifically because that's what the meeting's about. Otherwise, I'd ask you to take your seat.
The model litigant was about AMP's business specifically, so you. No, this question I'm talking about. Sure, and my last question was, so I'm not sure why you would give me that warning in advance. Because I've seen how you operate. I beg your pardon. I beg your pardon.
You come to these meetings, you've got an axe to grind across the industry, and then you take up time making statements that aren't questions.
That is a disgrace. I do a lot. I'm paid nothing to do this. I've traveled down here from Queensland at my own expense. I do a lot for the industry. In fact, thank you for raising it. I wrote to Alexis George and six other banks some month ago, and it was designed to assist the industry because when people get scammed or hoaxed, there's no standard email address to respond to.
No, but hopefully there's phone numbers that they can ring straight away, and I'm sure.
Oh yes, and those phone numbers, there's long delays. Let me continue. CBA, to their credit, has hoax email addresses. Westpac has a hoax email address. I simply asked Miss George and seven banks to standardize it so that the public at large would know all I have to do is go hoax at AMP, hoax at CBA.
Do you know of the seven people I wrote to? The only one that dismissed me was Miss George. I've got others that have actually said, thank you, Mr. Caulfield, we're going to raise it with the ABA. I stand here today congratulating Westpac and congratulating Commonwealth Bank for starting that. I congratulate all the other banks for having model litigant principles. You are totally out of line with your comments. They are actually defamatory.
What? Defamatory?
Yes, they are reflecting from my character.
No. That is a disgrace to the heart. You may well turn my microphone off, but that is disgraceful.
Okay, thank you.
I worked with Alexis George at no cost to me, at no income to me, at a cost to me to help bring in model litigant and fairness principles based on the disgusting experiences that I've had.
Those experiences across different banks inform me, and I am out there to protect other customers and other shareholders and make things better across the industry.
I am sure that work's appreciated. I really do hope that it is appreciated because there are some, you know, horrid cases out there. Unfortunately, Mr. Caulfield, at this meeting, we're dealing with the business of AMP. Whilst I applaud the work that you do, and I really do, I'd like to move on now with the meeting, please.
You've contradicted yourself. You talked of my axe to grind and now you're back.
No, no. Sorry. My point about that was this is a meeting for the business of AMP. Which I'm discussing. All right. What's the point of not discussing? It's not business. Look, we'll agree to disagree. Thank you very much for coming down.
Thank you for the work that you do, and I genuinely do say that because, you know, you are doing it on a voluntary basis. There is no doubt about that. I really do need to get on with the meeting.
This delay was only caused by you. I will get on with it now. Cryptocurrency. Yep. Cryptocurrency is not recommended by the regulators. It is not recommended by a host of people. It is a risky area of business. I am talking about the business of AMP now. Yeah. It is a small amount, but it is still AUD 16 million or AUD 20 million thereabouts. AMP should not be investing in these risky types of assets. Yes, it is applauded by Donald Trump, but I do not think that is the benchmark we should be going by. Can you tell me what your strategy with cryptocurrency is?
It's actually a matter for the trustee of the super company because we don't oversee those investments, etc., in the first instance. In the second instance, it's not actually, as I understand it, an investment in cryptocurrency, but it's actually an investment in an index that's sort of tied to the value of crypto. You know, personally, it's a very small amount. I guess it's a toe in the water that they've decided to take. Like you, I wouldn't hold any cryptocurrency, but this isn't cryptocurrency. It's a fund that refers to that price.
Just a final item, just in follow-up to your interactions with Dr. Schmulo, when you talked of there is equal opportunity for yourselves and ourselves to talk to, you know, regulators or, you know, boards and those type of things.
The minister, the financial services minister, Stephen Jones, one night before the AUD 1 million fines were going to come in for, you know, malfeasant bankers, Annably called and said, "We want to meet." And the ABA that you partly fund and you contribute to immediately agreed to turning around the AUD 1.1 million fines for bankers, only for bad poor malfeasant conduct. I have asked the financial services minister to meet 26 times, and he refuses to meet with me or any of our colleagues. When you said there's an equal opportunity, there is not an equal opportunity. You can take that as a statement.
Thank you. Yes.
Chair, I would like to reintroduce Mr. De Cruz.
Sorry, Mr. Chairman, I won't take too much time. I didn't intend to ask this, but having reconsidered it, I'll ask.
I told you a story of myself, and I just wanted to know what was the culmination of that. The question is, the class action had something to do with the advisor's book of register. Yeah. When I alluded to you being 40 years in the business and me being, I said there was a profit type of bonus arrangement that probably it's written in the statute for the Reps Association. When I addressed it to management of AMP, the ducks hubbed it to the class action. The class action doesn't look after that. The class action is only saying you were paid less than 4% and you should be getting 4%. Whether we get anything out of that or not, I have no idea, and I'll wait and see.
But can I ask whether I can expect management to engage with me in terms of the 15% plus or something that I should maybe have got on my register for being around for so long? Right. Obviously there's a lot more to your specific circumstances than we should be sharing here. Yeah, yeah, yeah. I have no hesitation about you not knowing about it because it's a detailed thing. I'm just asking whether management will engage with me to see whether anything can or should be done. Sure. I'm not expecting everything. Yep. Who can you see? Right, if you see Blair, our CFO, after the meeting, he'll take your details and we'll work out where that goes. Thank you. Number two. Chair, I would like to introduce Miss Olivia Caulfield. Good afternoon.
I am quite excited and very interested in AMP's adoption and creation of the AI Center of Excellence. The what? The sorry? AI Center of Excellence. I was just wondering if you could speak a little bit more about it in terms of the total amount of investment that's gone into it, as well as the expected or projected returns and benefits that will come about as a result of it. Lex knows a lot more about that than I, so I'll hand over to her if that's okay. Thanks. Okay, we just have a small team of people actually that are sitting in the AI hub, and they're really there to make sure we have the appropriate governance in place because, as you imagine, it's an emerging technology, so we want to make sure that we manage the risks.
I think we have about seven people sitting at the hub, and they're pretty much working with our business units to install AI across the business. We're in the second year of our AI hub, so we're starting to kind of get information about how we measure return, how long it takes to measure that return. I think we're still in the infancy in determining value that we drive for that, but it's certainly something that we believe we will drive value over time. Right now we're in that infancy stage. Yeah, that's really great to hear. As a question to jump off of that, I was just wondering, do you work with ASIC or APRA or any of the regulators?
Because in your annual report, it seems under regulatory environment, page 23, you mentioned that failure to adequately anticipate and respond to future regulatory changes could have a material adverse impact on the performance of the businesses. It seems like there is an opportunity to leverage AI to help mitigate those risks when it comes to compliance with regulatory obligations. Is that part of something that the team considers? Did you have any specific examples? That's not something we're working on now in terms of meeting regulatory obligations in relation to AI, but clearly the regulators are very interested in this, and we engage with them frequently on what we're doing in this space. Is it something that you would consider in the future given that you've highlighted it as? Possibly, yeah.
I'm not going to say no because I think AI has got a role to play in many places, but it's not something we're looking at right now. Okay, great. Thank you. Number two. Chair, I would like to reintroduce Mr. Peter Starr. Thank you. Mike, can you confirm for the shareholders? One, what current outstanding litigation is against AMP? Two. Hang on. Why don't I answer them as you go along rather than make sure and remember them all? Sure. So David, perhaps you can deal with the outstanding litigation. So all the material litigation is outlined in our contingent liability note in the annual report. Right, so how many cases, David? As I said, the material ones are in the annual report. There's a range of what I would call BAE litigation that also goes on, but certainly the material ones are outlined in our annual report.
What is it? How many is it? Two? I think there's four currently in the annual report. Is the board aware of the regulators that look after the financial institutions bringing any action against AMP? No, I'm not aware of any. Any current? No. There was a court-enforceable undertaking that the superannuation fund had. That's correct. Going back, but I think that's ended. That's been taken off. There are no other outstanding court-enforceable undertakings, no? Yes. Okay, thank you. Our blue shareholders have had a reasonable opportunity to discuss all of the business that they wish to discuss. As there's no further questions or comments in the auditorium, we will now turn to the items of business, which will be put to a vote. Phone questions? Are there any questions on the phone, sorry, before I do that? There are no questions via the phone lines.
Thank you. I'll move to item two of the meeting, which concerns the re-election of our directors, Rahul Choudhary, Andrew Slattery, and myself. Details of the directors seeking re-election are set out in the notice of meeting. Separate resolutions will be put for each director's re-election at the conclusion and discussion of each resolution. We now move to item two A concerning the proposed re-election of Rahul Choudhary as a director. The proposed resolution is on the screen. Rahul was appointed as an AMP director in May 2020. I will now invite Rahul to address the meeting. Thank you, Mike. Good afternoon, fellow shareholders. It's a privilege to address you today as I seek re-election to the AMP board.
I joined your company in 2020 after the Royal Commission to help restore the reputation and financial success of an iconic brand that has long been a cornerstone of our industry, 175 years, as you heard. As you well know, at that time, AMP had several challenges, very deep-rooted challenges, structural, strategic, as well as operational. Also, it needed to regain its focus on our key stakeholders, customers, staff, regulators, our community, and of course, you, our shareholders. In the last few years, we have worked resolutely and with resilience and, frankly, really hard to fix these legacy issues. Mike and Alexis have spoken about the major and specific steps that we've taken to make your company match fit, to future-proof it, and to grow and deliver improved shareholder value to you. We're making progress.
We have momentum, but clearly, you know, and I know that there is much more to do. To continue to deliver, I believe AMP needs committed leadership with vision, with expertise, with urgency, a sense of purpose, and a steady hand. What do I offer? Three things, really. One is deep expertise in the financial services industry, as well as extensive experience in financial reporting, corporate governance, risk management, and regulation. Secondly, I've chaired the audit committee for two and a half years, and I've been on the risk committee for five years. That has enabled me to contribute directly and actively to our strategic and operational priorities. Finally, my energy and passion to help AMP succeed is undiminished. I'm confident that working together, the board and management will capitalize on emerging opportunities, drive sustainable growth, and deliver improved shareholder value.
I truly believe in this company and will be honored to continue to serve. Thank you. Thank you, Rahul. I confirm that Rahul has the unqualified support of his fellow directors for his re-election. I will now open the discussion on the re-election of Rahul and will answer questions received before today's meeting and online first. David, could you please read out the questions? Chair, we have a comment from Mr. Hall who notes that he has voted against all directors being re-elected. He notes a relative of his, the late the Honorable John Sargent Turner, was chairman of AMP 1875 to 1900 and would be turning in his grave to see how greedy directors have been in lining their own pockets instead of working for shareholders. Are there any other questions? Chair, there's no further questions pre-meeting or online at this stage.
We have a question at microphone number one. Thank you, Chair. I would like to reintroduce Mr. Sanderson. Careful. Yes. Go, Mr. Chaoudhary. A couple of questions. Given your long career with PWC, now subject to serious ethics and integrity questions, how can AMP shareholders trust that your decisions are independent, not shaped by the professional culture that contributed to the systemic issues across the financial industry? I'm sorry, missed the question. All right. I'll read it in full again. I'll paraphrase it for you. He wants to know, given all the things that went on at PWC, how you feel about culture and other things in the organization and can you contribute on that front? Oh, yeah. Yeah. Oh, yes, sorry. That is a great question.
I will, for the record, say that I left the Australian firm of PwC in 2012, long before these issues came to light, and spent at least 10 years in the lead-up to my departure in spending really time addressing the culture within the firm post-merger of PW and Coopers & Lybrand as it then was. I spent a fair bit of time working on organizational culture. In my role on the risk committee, myself and other members of the risk committee, together with the rest of the board, have put an awful lot of effort and time together with management in ensuring that the culture of our organization at AMP is where it needs to be. Right at the top of that is integrity.
It's looking after our customers in a way that, frankly, we lost sight of in the years leading up to the Royal Commission. Thanks for that. Just one more quick one. AMP recently criticized ASIC for inconsistent enforcement, but AMP itself has a well-documented history of misconduct, including charging dead clients. As Chair of the Audit, do you believe AMP is unfairly treated by regulators, or has AMP still not accepted its own accountability? Just to clarify that point, the specific issue that Lex was talking about when she made those comments as, I think, someone from Colonial First Aid did too, was that in a court judgment against one of the industry funds, the judge fined them, I don't know, AUD 27 million on a case that ASIC bought.
In the findings said that if you had been a for-profit fund, the fine would have been a lot more. The point that Lex and the other CEO made was that it does not seem fair that the size of the fine should correlate to the structure of the organization. I suppose. I often wonder that looking at the life of AMP, and this is not related to you, Mr. Chaoudhary, it is a comment on your comment, how much naughtiness happened when AMP was a mutual society as opposed to its current model. I cannot answer that question, but you probably would have viewed. I do not know. That is all I have got. Thank you, Mr. Chaoudhary. Thank you. Microphone two. Okay. As there are no more questions of—sorry. Chair, I would like to reintroduce Mr. Caulfield. Thank you. Oh, hello. Thank you very much.
To put a different spin on things, I would like to thank Mr. Choudhary. I'll preface it with saying, Heather, your roles in Audit and Risk Committee are very difficult roles. There's a lot going on inside AMP. It's very challenging, and there are deep things that you're looking into. I attend lots of AGMs, as you know, Mr. Hurst, but Mr. Choudhary is one of the few that actually spent a lot of time after an AGM, might have been two years ago. He might have spent half an hour simply talking to our colleagues here. And we're able to obtain a deeper understanding, and there are some things that we can discuss on the byway. I wanted to congratulate him for his listening and his engagement, albeit he's in a difficult position and not everything has been successful, and there are a lot of challenges ahead.
Thank you. Thanks, Mr. Caulfield. Thank you, Mr. Caulfield. Oh, yes. Oh. Okay. As there are no more questions from the floor, we will now go to the questions on the phone line. Could the operator please advise if there are any questions on the phone line? If so, please introduce the speaker. Thank you. There are no questions via the phone lines. Thank you. I believe shareholders have had a reasonable opportunity as a whole to discuss this item. If there are no further comments or questions, I will close the discussion for item two A. Thank you, ladies and gentlemen. I will now formally propose the resolution that Rahul Choudhary be re-elected as a director. If you have not completed your voting card for this resolution or voted on the online platform, please do so now.
As item two B relates to my own re-election, I will now hand over to Rahul to preside as chair for this item. Thank you, Mike. I'll chair the meeting from where I sit, if that's all right. Item two B is to consider the proposed re-election of Mike Hurst as a director. The proposed resolution is on the screen. As you heard from Mike earlier in the meeting, he was appointed as an AMP director in July 2021 and as chair in April 2024. Mike has already addressed the meeting for his re-election following his opening address. I can confirm to you that Mike has the unqualified support of his fellow directors for his re-election. I will now open the discussion on the re-election of Mike Hurst, and either he or I will answer questions received before today's meeting and online first.
David, do we have any questions? Rahul, we have no questions pre-meeting or online at this stage. Thank you, David. As there are no questions received prior to the meeting or online, I'll take questions from the auditorium. Do we have any questions? Thank you. Thank you, Mr. Choudhary. I would like to reintroduce Mr. Sanderson. Thank you, Mr. Sanderson. Thought I'd be even-handed. Mr. Hurst, during your time as CEO of Bendigo and Adelaide Bank, were there any major governance failures or issues that shareholders should be aware of? How do you think that that track record qualifies you to help AMP through its own reputational recovery? When you say major governance failures, what are you? I'm asking the question. There may be none. Right.
The only thing that I think that might fit the bill, there was a breach of the banking code of conduct in relation to collection of loans on the Great Southern Class Action, where the legislation on collections changed halfway through the process, and the collections team did not adjust their practices on things that were already in train. What version of the banking code of conduct? What year? Oh, I cannot tell you that. Sorry. The class action went from 2008 to 2013. Right. Fifteen. That is all. Thank you. Thank you. Thank you. We have a question. Microphone two. Mr. Choudhary, I would like to reintroduce Dr. Shmulo. Thank you, Doctor. Mr. Choudhary, in light of the torrid history that this company has endured since demutualisation and in particular since the Royal Commission, it is legitimate that this board be put under pressure and be asked difficult questions.
What we witnessed five minutes ago was Mr. Hurst losing his cool. He got asked some difficult questions, and he issued a slur against Mr. Caulfield and said to him, "I've seen how you operate." I query whether Mr. Hurst has the temperament to run a company like this, whether he has the temperament to endure legitimate criticisms, and I invite him to rise to an apology to Mr. Caulfield. I would say this to you, I'm standing for election to represent the great state of New South Wales in Federal Parliament Senate. If I'm elected, you and your board should wait and see how I operate. I'll take that as it's three. I think I did say to Mr. Caulfield that I appreciate his actions, the voluntary manner in which he goes about it, the fact that he does all that.
I believe I've covered that off. It is my role as the Chair to make sure that the meeting is conducted in an orderly manner and to ensure that it deals with the business of the company. Where it starts to go outside of that, I have to make a judgment as to whether or not that is pertinent to the meeting and in the interests of an orderly conduct of the meeting. As I said, I appreciate all the work Mr. Caulfield does, but we need to keep the discussion to the business of the meeting. Mr. Hurst, making sure that the business of the meeting is conducted in an orderly fashion does not require you to issue slurs against people in this meeting. Because you backpedaled is not the same as rising to an apology. Okay. I'll take that as a comment. Thank you.
Microphone two. I would like to introduce Mr. Caulfield. Thank you, Mr. Caulfield. Thank you, Mr. Chaoudhary. In relation to Mr. Hurst, I have a question that I wonder about the number of roles that people have where in this position. Mr. Hurst is the Chairman, obviously, and Chairman is a more onerous role than simply a director. To also be a director at Amsil Limited and a director of Bouton Limited, both ASX-listed companies, those directorships take time as well as the chairmanship here. It is not just that. There are also directorships of GMHBA Limited and Adelaide Airport as well. Beyond that, there is good work that is done as an honorary member of the Business Council of Australia. Six roles, including a chairmanship, in my view, is too much.
I note that APRA is looking at these types of things to see where they can govern. You can tell from my questions, I'm concerned with things that are happening inside of AMP, and an amount of time has to be dedicated. I note, Mr. Choudhary, that you said, "We're the board are—I can't remember the exact words—satisfied that he has the time to put in." I stood up at the Bendigo AGM, and maybe Mr. Hurst remembers, and I questioned Mr. Foster at the time, who was a director of Bendigo. I said, "I think you've got too many roles." Subsequently, Mr. Foster, as chairman, was found he couldn't handle all of those things. To have a couple of directorships is reasonable. You get some cross-fertilisation of ideas. I'm not saying just a chairman or a directorship of one. Two is entirely good.
Three is pushing the envelope. But when it's six roles, I think that that's too many, and I think that that has a diluting adverse impact on each of those. Thank you, Mr. Caulfield. I'll invite Mike to respond to the question of whether he's got too many roles. What I can tell you, though, on behalf of the board, is that Mike, as Chairman, spends all the time he needs to to chair the board and to interact with the CEO. You'll see from the director's report, Mike has not missed a single meeting of the board or any of the committees that he attends. Not just that, but there are several interactions that Mike has with members of the board and with management, and he does that right through the year.
I believe I speak for the entire board when I say to you that Mike spends all the time he needs to at AMP. Thanks, Rahul. Mr. Caulfield, when I took on the Chairman role, I resigned my role on the Button board. I am no longer on that board. It is just that it is in the annual report because you have to put in there whatever listed board you are on during the year. I am no longer on that board. I also resigned my position as acting Chairman of Racing Victoria so that I could devote more time to AMP. I think the general rule is that it might be an ASO that they allocate points, and they say five points is as much as anyone should have.
It's two points for being a director and then a point for—sorry, two points for being a chairman and then a point for each board that you're on. So I have a total of five points, which is within what they consider to be reasonable. The other thing that I'd say is that when you've been a CEO of a large listed company, you learn to manage your time particularly well. You work big hours. I'm very capable of working 40, 50, 60 hours a week, whatever it needs to be to get a job done. Not that I have to do that anymore. I certainly believe that I know how to allocate my time appropriately. I think, or I hope my fellow directors would think I'm very well prepared for every meeting I come to.
I'd like to think that the CEO has access to me whenever is required and that I provide the appropriate amount of time for her. I appreciate your comments. I agree with them to some degree that you can have too many, but I don't believe that I'm in that situation. Thank you for clarifying the one directorship that you mentioned that you'd resigned from. That's a step in the right direction and something you appreciated. Thank you. Further to Mr. Choudhary's comments about attending meetings, we could look at all of the directors in all of the big corporates of Australia, and nearly every director attends every meeting. Yet we see major failures in corporations. Attending meetings is not the measurement of what will succeed or not. There's something else there.
There's some deep commitment there that is required beyond simply attending a meeting, etc. I'm sure that there are those things here. If we talk to STAR, if we looked up the annual reports of STAR, where ASIC is investigating every single director now, and go back a couple of years, the chairman said, "I can assure you that every director has the time," and clearly they didn't. There were things that were missed. It's just worth thinking about how much can we take on in complex businesses. Thank you. Thank you, Mr. Caulfield. Attending meetings was only one of the KPIs that I'd referred to, but thank you. Thank you. Microphone two. Sorry, I beg your pardon. One, and then we'll come on to two. Thank you, Mr. Choudhary. I would like to reintroduce Mr. Sanderson. Mr. Sanderson. I'd just like to fix a comment. Mr.
Hearst said that he had some latitude in relation to what questions he accepts. I'd like to point out that 250 S of the Corporations Act 2001 requires that the chair of an AGM allow reasonable questions and comments. It goes on further to say, "This is an offence of strict liability under section 6.1 of the Criminal Code, not to do so." I think you were trying—you were inferring that you could limit your questions from the floor more than what the Corporations Act says. Thank you. I'm well aware of my obligations under the Corporations Act, and I think the word reasonable. Yes, but you also said to the—I'm restricted to the businesses at hand or something. I forget. Yeah, yeah, reasonable. I believe, given that the meeting's been going for nearly three hours, I think I've met the test of reasonable.
At the end of the day, people like us don't have another opportunity. You are not approachable during the year. This comment's not just at AMP. I'm talking across the financial sector. Thus, you get it all in one shot. Anyway, it's just a comment. Thank you. Thank you. Thank you. Microphone two. Mr. Choudhary, I would like to reintroduce Mr. Star. Mr. Star. Mr. Choudhary, how are you? I'd just like to say on behalf of the shareholders I represent, we're fully supporting you. You've always been generous with your time after meetings, and I know you spoke to a colleague of mine, Mr. Caulfield, and myself. We're very grateful you're on the board, and there's no issues. In relation to the question for Mike, I'm pleased that you've stepped back from those two positions. You're now on five.
I think that's more reasonable. I think that running any financial institution requires a lot of attention and key focus. It's really important. You've only got to look at Court 16 of the Federal Court where Justice Michael Lee is presiding over the former directors of STAR and executives. What the hell went on there? We don't want to be in that position. Let's just make certain that we put our best foot forward, you fellow directors, and let's do some good for the shareholders. Thank you. Thank you, Mr. Star. I see that there are no more questions from the floor, so we'll move. Right, microphone two. Ms. Chaoudry, I would like to introduce Mr. Rutshford. Good afternoon. Good afternoon, everybody. My name's Mr. Rutshford, and I'd like to vote for a toilet break. Can we have a toilet break, please? And then I'll go.
Yes, I am the Chair. Thank you. Great suggestion. I think in the interest of keeping this meeting going, let's just keep going, shall we? Are there any further questions from the floor? No, there are not. Let me move to questions on the telephone. Thank you. There are no questions via the phone lines. Thank you very much. Thank you. I believe Sheldon has had a reasonable opportunity to discuss the matter as a whole. I will close the discussion for item 2B. Ladies and gentlemen, thank you very much. I'll now formally propose the resolution that Mike Hurst be re-elected as a director. If you've not completed your voting card for this resolution or voted on the online platform, please do so now. I'll now vacate the Chair and hand back to Mike. Thank you, Rahul.
We now move to item 2C concerning the proposed re-election of Andrea Slattery as a director. The proposed resolution is on the screen. Andrea was appointed an AMP director in February of 2019. I'll now invite Andrea to address the meeting. Thank you. Good morning, shareholders. Actually, it's afternoon now. Good morning, shareholders, ladies and gentlemen. It's been a privilege to serve as a director of AMP for the past six years, and I'm honored to stand for re-election to the board of this iconic institution. When I joined, AMP was navigating one of the most challenging periods in its history, facing legacy issues, the need for transformation, and the task of restoring culture, trust, and confidence. AMP has repositioned itself with a renewed purpose and strategy, leading Australia's wealth and retirement industry through bold decision-making and a clear focus on customers, shareholders, employees, and long-term value.
The dedication and commitment of all of our people will continue to shape our future long-term success. Under the leadership of Mike, Alexis, our executive, and my fellow board directors, AMP is now a streamlined, technology-driven business with a clear path to sustainable growth as a trusted provider in helping people create their tomorrow. In the last 12 months, we've expanded our leading digital and AI programs. We've repositioned our advice and platform businesses. We've delivered positive fund flows and market-leading retirement products. We've launched a digital bank, and we've returned AUD 1.1 billion to shareholders. All significant milestones of a resilient, future-ready organization. I was appointed to AMP for my expertise in wealth and retirement systems design and my ability to transform governance, culture, and strategy. I've played a key stewardship role, driving efficiencies, shaping strategy, and championing innovation.
As Chair of the Audit and ESG and Sustainability Committees over my tenure, I've led best practices and reinforced our customer and member focus. I remain committed to serving you as shareholders with purpose and dedication in unlocking future growth and long-term value. Today, I respectfully seek your support for my re-election. Thank you very much. Thank you, Andrea. I confirm that Andrea has the unqualified support of her fellow directors for her re-election. I will now open the discussion of the re-election of Andrea Slattery and will answer questions received before today's meeting and online first. David, could you please read out the questions? Chair, we have no pre-meeting questions or questions from the platform at this stage. Thank you. I'll now take questions from the auditorium. Microphone number one. Thank you, Chair. I would like to reintroduce Mr. Sanderson. Howdy, Ms. Slattery.
You're getting off pretty cheap, aren't you? Given your long-term standing role as founder and CEO of the Self-Managed Superfund Association, do you see any conflict between that advocacy and AMP's broader superannuation offerings? How do you ensure impartiality in AMP decisions? Thank you very much for your question. Yes, I did. I actually was the co-founder of the SMSF Association, in fact, rescuing the legislation before the Parliament at the time to remove SMSF from the retirement system. When I started that, I set about creating a professional advice and services industry, creating an opportunity for retirement for many, many thousands of Australians to benefit from, and created a professional advisory community in advice and auditing, which rests at undergraduate, postgraduate, and master's programs. That was part of what my role was in setting up an industry and actually bringing the industry together.
One of the things about AMP is my ability to understand and have been involved intimately with developing the retirement industry systems framework and how it all works and how the opportunity for retirement, wealth transfer, and advice, professional advice can be delivered to the community. I have found, and I believe others in the organisation have found that my ability to be able to direct and drive future retirement opportunities, education, advice models, and frameworks has been valued in the changes that we've made with developing leading retirement products, with developing leading professional advice models in the organisation. I'll leave it to you, but we're in a much better professional place, not because of me, but because I have been able to provide independent guidance in this area with deep, deep knowledge that's been acknowledged both nationally and internationally.
I've been recognised with awards nationally and internationally for my knowledge of retirement income systems and wealth transfer. You don't see a conflict in effectively being a buyer and a seller of superannuation? I finished my time with the SMSF Association as a CEO in 2017. I finished as a director during the middle of 2018-2019. And I have come to AMP with a deep knowledge of the core business of AMP from its history. Has always been involved in advice, insurance, wealth, retirement, etc. Except that this has been brought up. You sit on multiple boards. Can you assure AMP shareholders that AMP isn't getting a part-time director and that your time and focus is truly committed to AMP challenges? I'd actually—you probably should be asking my husband that.
He would tell you that my time here as a director has been—I have been able to commit a significant amount of time. If you actually looked at what I'm currently involved in, I'm involved in the Clean Energy Finance Corporation as a director. I've just been reappointed by both sides of Parliament. That is a good role, and that is my only other major role. I'm currently the Deputy Chair of the Woomera Prohibited Area. For those that don't know what that is, it's actually the largest land-based weaponry testing site in the world. It sits in South Australia. It's about 17% of South Australia's countryside up north. We look at a coexistence framework. We deal with six of the largest indigenous communities in Australia, with defence, federal and state governments, with tourism, with heritage, and with a range of other things.
We have actually been recognized as an exemplar of that coexistence framework and how we actually work together along with national security. That takes up only about three weeks of my time on an annualized basis. I am basically a part of directing to the defense industry and the state governments to do that work. Currently, I only really have about two roles. One here with AMP Bank, AMP Limited, and I am on the foundation of which I am very, very proud, and with the Clean Energy Finance Corporation. Does the Clean Energy Finance Corporation get involved in nuclear? A big pun. Does the Clean Energy Mob get involved with nuclear? Does it lend to nuclear? Oh, no. We have a—we actually, as part of our investment mandate, we are not able to go anywhere near carbon capture and storage on nuclear.
That is actually part of the ban on anything that we do. Okay. As a Croatian, I'm quite familiar with Woomera. I remember as a kid, Vulcan bombers flying over the house. That would be around when they were testing atomic bombs here. Thank you for your— Thank you. Pleasure to meet another South Australian. Thank you. Microphone two. Chair, I would like to reintroduce Mr. Peter Star. Mr. Slattery, just to let you know that we'll certainly be voting for you. We're grateful you're on the board. Please keep up the good work. Thank you very much. Very kind. Okay. Is there no more questions? Yes, no. Is there no more questions from the floor? We will now go to questions on the phone line. Could the operator please advise if there are any questions on the phone line? If so, please introduce the speaker.
Thank you. There are no questions via the phone lines. Okay. I believe shareholders have had a reasonable opportunity as a whole to discuss this item. If there are no further comments or questions, I will close the discussion for item 2C. Thank you, ladies and gentlemen. I now formally propose the resolution that Andrea Slattery be re-elected as a director. If you have not completed your voting card for this resolution or voted on the online platform, please do so now. We will now turn to items three and four, being the adoption of the 2024 remuneration report and the approval of the CEO's long-term incentive for 2025. The proposed resolutions are now shown on the screen. Items three and four will be voted on separately, but as they both relate to remuneration-related matters, we will deal with the discussion of these two items together.
Further information on these items is set out in the notice of meeting. The remuneration report outlines the board's policies regarding the nature and level of remuneration provided to key management personnel. The report addresses the alignment between the board's remuneration policies, AMP's performance, and remuneration outcomes, ensuring that the remuneration outcomes are appropriate within the context of the performance year. For further information on remuneration outcomes, please have a look at our remuneration report. The board recommends shareholders vote in favor of adopting the remuneration report. I will hold over questions and comments on the report to after item four is introduced. Item four being the approval of the CEO's long-term incentive for 2025. The proposed resolution is shown on the screen.
As outlined in the notice of meeting, the CEO's long-term incentive will be granted in performance rights with a face value of AUD 1.715 million, equivalent to 100% of fixed remuneration, and represents the maximum grant. The ultimate value will depend on the number of rights that vest after the performance period and the share price at the end of the restriction period. The Board has revised the LTI plan for 2025. The number of performance metrics has been reduced from three to two by removing the compound annual growth rate of AMP's adjusted EPS metric and increasing the weighting of the relative total shareholder return. The relative TSR metric will have a gateway of absolute TSR needing to be above zero. The 2025 executive remuneration framework is structured in a way to meet our regulatory requirements.
This is achieved by balancing financial and non-financial performance measures and ensuring remuneration is deferred for sufficient time to detect any potential risk and conduct issues and take action if required. The grant of performance rights to the CEO has a total vesting period of six years. This comprises a three-year performance period and an additional restriction period of up to three years. This ensures the CEO's interests are aligned with shareholders' interests over the entire six-year period. The performance rights are split into two components, each with its own significantly challenging performance measures and targets, the details of which are set out in the notice of meeting. The board, with Alexis abstaining, considers that it is the best interests of shareholders to approve the long-term incentive grant to the CEO.
I will now respond to any questions or comments on item three, the remuneration report, and item four, the CEO's long-term incentive, and will answer questions received before today's meeting and online first. David, would you please read out the questions? Chair, we have a question from Mrs. Caulfield. Over the past several years, AMP's share price has stagnated, underperforming peers such as Qantas, which has seen an approximately 150% increase in the same timeframe. Despite this, executives have continued to receive substantial bonuses. How does the board justify these bonuses in light of such poor shareholder returns? Thank you. First of all, I think it's pretty hard to compare across industries. All industries and sectors are faced with different challenges at different times, and performance is a reflection not just of how a company itself operates, but also what's going on within each sector.
Having said that, the bonuses and LTIs that have been granted through the period have all been granted in line with, in the case of the LTIs, especially for the CEO, what was approved. So the measures are set out, approved by this meeting, and then judged against those criteria. Similarly, with the STI, each year the board sets a number of criteria which the bonuses are going to be tested against, not just for the executive, but also for the entire staff. The achievement of those criteria or not dictates the amount of bonus subject to any board discretion that might be exercised. This year, the board exercised downward discretion on the bonus pool, taking it from 102% to 90% on the basis of there being favourable markets through the year, which assisted in some of the achievement.
That's basically how we get to where we get to. Chair, we have a range of questions submitted pre-meeting. Is executive remuneration linked to the share price performance? How can shareholders approve the REM report and the CEO's LTI, given where the share price is today? The simple answer to that, and perhaps I might ask the Chair of the REM Committee to run through the exact things, but yes, it is linked to the share price performance. Where the share price is today is still significantly above where it was at the start of the year. In the year that we're talking about, the share price went up 71%. Kathleen, perhaps if you could just quickly outline how that's tied. Thank you, Chair. Thank you for the question.
The design of the REM framework is indeed one of its principles is to be tied to shareholder experience. Specifically, even the short-term incentive, the way it is paid is 40% of the achievement is deferred into shares. Clearly, then that is directly aligned with shareholders. In terms of the long-term incentive, 70% of the performance measures are also linked to shareholder experience. The relative TSR is a robust measure of AMP's financial performance and return for shareholders relative to other companies. That is a very direct link. In the year that we've been in, the other half was the EPS, or earnings per share, which provides an appropriate proxy for measuring intrinsic long-term shareholder value creation. That also aligns management outcomes to shareholder experience. Thank you, Mike. Thanks, Kathleen. Chair, we have a question from Mrs. Haysom.
What steps are being taken to reduce the remuneration packages for the CEO and board of directors? Okay, I'll deal with the board of directors first. In the last five years, the remuneration paid to the board of directors has been reduced by 43%. That includes actual pay cuts for directors, including a number that are still on the board. There was a reduction of about 20%, I think in 2022. In respect of the CEO and her remuneration, Alexis was hired in 2021 on a package of fixed remuneration incentives. Over that period of time, there's been no change in terms of increases awarded to Alexis. In fact, the only change that has been made in that period is reducing for this year going forward and the years ahead the maximum LTI opportunity from 200% to 150% to better align it with market.
Chair, we have a question from Mr. Forster. Can the board please align the exco with at least a three-year vesting period for bonus payments based on total shareholder return? The FY24 result disappointed. Regulatory capital is thin, and the mortgage book net interest margin unacceptable. These are all fundamental core aspects of the AMP business model. When can shareholders expect capital growth? As I pointed out, the share price grew by 71% over the year. That is capital growth. Chair, we have a question from Mr. Trigg. How does the board justify STIs and LTIs that are so large when normal shareholders are getting low returns on their investment? If there is a published formula relating to these extra incentives, extra payments to accompany profit, where is it? Is the board aware of how bad the size of these payments look to the average person?
The first question around the STI and LTI, obviously the board needs to pay market remuneration to be able to attract the people that we need to run the company. I think in anyone's view, Alexis has done a fantastic job taking this company from where it was in 2021 to where it is today, which is a clear for businesses to take forward, a clear view of what we want to be, where we want to be, and how we're going to get there. The board is very pleased to be able to have Alexis running the company. In respect of the extra incentive payments to accompany profit and the information on that, it's all in the remuneration report, which runs to probably about 20 pages in the annual report. Please avail yourself of that.
Is the board aware of how bad the size of those payments looks to the average person? Look, there is no doubt financial services is a very well-paid sector of the economy. To the extent that those numbers are significant, that relative to other industries, it is. We are in that sector, and we have to make sure that the remuneration we pay is competitive. We end up in that situation. Chair, we had some pre-submitted questions in relation to directors' fees. Have directors' fees increased? Why do we not restrict directors to pay rises once every five years? As I pointed out, directors' fees have fallen 43% over five years, and there have only been pay cuts. Chair, we have a question from Ms. Cripps. What percentage increase in salary has the executive team received this year? How does this compare to staff salary increases?
There were of the executive, so there's the key management personnel who received no increase. The broader executive, two of the executive received small increases basically because they came onto the executive, and we aligned their pay to market, and the average increase for staff was 3%. Chair, we have a question from Ms. Smith. The platform's business contributed AUD 107 million to underlying profit, and the super business contributed AUD 67 million. These are some of the major profit-driving businesses of AMP. However, their executives, Edwina and Melinda, are not disclosed in the REM report as KMP. Why is this allowed? Basically it comes down to the definition of key management personnel, which is those people who are involved in the running of the whole of the business on a day-to-day basis and setting the strategic direction.
In the case of the key management personnel we have, it's very clear to see the majority of those do that. One exception might be Sean, who you could say is on a par with Edwina and Melinda in that he runs a specific business. Because of the importance of the bank in terms of balance sheet management and capital, he has a big contribution to make at that top level. Edwina and Melinda don't qualify under the definition of key management personnel. Chair, we have a question from Ms. Waters. The salary of the CEO and directors are way beyond reason considering the share price of AUD 1.24. Considering the 2006 share price was AUD 8.94, I would like to ask why are these shares such a low price in today's market?
In my opinion, CEO and directors do not deserve to be paid such high salaries or bonuses considering the extremely low share price. I think the key thing in that is that in 2006, the company was a very different company to what it is today. The life company was the dominant part of the business. It was a very big life company, the biggest in Australia. It's no longer part of this business. You can't compare; it's like comparing apples and oranges. Chair, there's no further questions online or pre-submitted at this point. There's no further questions. I'll now take questions from the auditorium, and we have one on microphone two. Chair, I would like to reintroduce Mr. Aravindan. First of all, I'd like to congratulate the board for its increased transparency in remuneration and its focus on aligning with shareholder returns.
My question is regarding are there any further opportunities to adjust pay structures now that AMP's business scale and strategy has become more settled? Sure. I think we're all very aware that the company is a smaller company than what it was when some of our executive were hired in the remuneration packages that were offered at that point in time. Over time, we've sought to address that by not providing any increases in remuneration and by using turnover to bring people in on salaries that might better reflect the size of the company, and we'll continue to do those things. Thank you. Thank you. Chair, I would like to reintroduce Dr. Shmilo. Mr. Hurst, my question is for the CEO. Ms. George, APRA has said non-financial risk must be raised across the industry. I note 30% of your remuneration is based on comparator companies' so-called rep track scores.
I note the companies you've chosen are ANZ, currently under a AUD 1 billion capital penalty for corporate governance failures, AUD 500 million of which were levied while you were the Deputy CEO. Rio Tinto, which purposefully and with malice of forethought blew up Juukan Gorge, having been forewarned of its irreplaceable cultural and historical significance. Qantas, which attempted to defraud customers of AUD 500 million in aircraft fees on flights that they knew were cancelled, while sacking 1,700 workers illegally, and Westpac, which paid a AUD 1.3 billion penalty for 23 million breaches of anti-money laundering and counterterrorism financing laws, including having been warned by AUSTRAC of 300,000 low-value transactions to the Philippines and Vietnam to fund pay-per-view, live-streamed, viewer-directed sexual abuse and torture of children and infants. I'm curious, Ms.
George, do you think it is appropriate, and are you proud of the companies against which you are compared for your remuneration, companies that steal from their customers, steal from the dead, and fund pedophilia? I think it's unfair to ask Alexis that question given it's the board that sets that cohort. That's what I was about to do. Good. The cohort of companies that we choose in terms of rep track, and there's two different cohorts. One relates to reputation, and then there's another cohort that relates to, I think it's the STI piece. That cohort of companies, because we're measuring improvement over a period of time, we have to use companies that are around the mark where we are in terms of reputation.
Otherwise, if we were to use companies that had, say, let's say we took the five companies who had a reputation that was significantly higher than ours, it's more difficult for them to improve their reputation when they're already at a top level than it should be for us who are trying to lift our reputation off lows, and we've been successful in doing that. From the board's perspective, if we chose those companies that had the higher reputations already, it's probably not a reasonable comparison as opposed to those who are sort of where we are. That's the reason that it's chosen like that. Thank you so much, Mr. Hurst. That is the most staggering admission. Contemplate what you've just said. Chair, I would like to reintroduce Mr. Caulfield. Oh, thank you, Chairman. The REM report, I think, is 30 pages. That's typical of other companies, etc.
You suggested in response to one person that the shareholders here should read the REM report. I do not think anyone here would have read all 30 pages. If they did, they would not understand everything in the REM report. This is not your fault, particularly at AMP, but across the board, I read the annual reports. It is very difficult reading to try and actually see. It is quite opaque. It is not transparent. To bring it back to AMP, I understand fixed REM, AUD 1.7 million. I do not agree that there should be short-term REM and long-term REM. I think that is part of making it too complicated. I think there should be a discussion with other corporations or regulators about just having a fixed REM and a long-term REM, long-term incentive. In the incentive there where it was reputation, the only measurement was the rep track. That is not enough.
It needs other measures. In terms of customers, it needs how do you measure the customers? How have you actually measured for Alexis? You're going to get this bonus. Where's the measurement? I bet no one in the room knows actually how that was measured. Oh, yeah. We have a customer satisfaction rating that we use. Is that Net Promoter Score? No, it's not a Net Promoter Score. What is that customer satisfaction rating? It's a customer satisfaction rating. We measure our customer satisfaction through surveys and other things on a monthly basis. It is the change in that customer satisfaction score. Okay. How do you measure it? Through survey. You don't put the surveys in here. You don't put the numbers in here. It's already 30 pages. Yes, but you could do a—thank you very much, but a little bit smarmer.
You could do a simplified one-page version that simply says number of customer complaints, number that go to IDR, number that go to customer access. I think you'll see that in our sustainability report. We detail the number of customer complaints that go to the ombudsman, etc., and the change in that over time. If it's in the sustainability report, I recommend just one page be lifted to put over here. You could have 20 measures. You could have number of breach reports, number of court cases. It's a measurement we could look not just for your institution, but across institutions to say who's got more complaints, who's got less complaints, are they rising or falling? We could compare—just to finish—we could compare yourselves year on year. If you had 46% complaints last year and 22% complaints this year, that's a big improvement. That's not opaque.
That's easy to understand. When I read this 30-page report, that's opaque. As you rightly point out, we are subject to regulation and legislation in terms of how we put that report together. It is very prescriptive in terms of the information we have to provide. I agree with you that having to sit down and read 30 pages on remuneration is a difficult task for anybody to make head nor tail of. That is the legislation. We need to comply with that legislation, obviously, and we do. In terms of the changes in customer complaints, etc., the ombudsman actually puts out statistics on that, I think either quarterly or six-monthly, that shows the change by organisation over time. It is something that the board monitors and takes into consideration when we are thinking about what we do with STI, etc.
Whilst there's specific targets in the remuneration report that, as you've called out, there's also discretion that the board has to exercise should we see other things occurring where we believe the specific measures in the scorecard don't truly represent what's going on. We take a broader view than just the scorecard. It's an incentive scheme. If you go to incentivise people, they have to understand on what basis it is that they're being incentivised so that they can measure their performance and understand the position that they are in relative to that scorecard. It's a very complex area of governance. When I first started, you used to get a fixed pay, and if you were lucky, you got a bonus, but the world's moved on. When I look through this and I see when Ms.
George came in as CEO and the share price today, you're talking about being selective with times. If we looked at that period of time, the share price within a few cents is the same. Same share price as it was when you started in August 2021 and the share price today. It might be around AUD 1.10, AUD 1.15, AUD 1.20. I think it was around—yeah. Look, put it in the ballpark of 10%, right? In the interim, there's been an AUD 1.1 billion return of capital as well. If you want to look at total shareholder return, you've got to take that into account along with the dividends that have been paid and the share price. Yeah, yeah, you do have to factor them all. Share price is one thing that is probably front of mind to a lot of people.
When we can look at other metrics, one of the other questioners mentioned Qantas, and you said, "Oh, that's not something we should look at. They're different industries." No, I didn't say that. I said it's difficult to make comparisons across sectors. Across different industries or different sectors. Actually, you use Qantas in your rep track to award Alexis the bonus. I explained that in terms of reputation and companies trying to move their reputation. I'm just talking about short-term incentives and long-term incentives. The business of the company, the remuneration is what I'm talking about. That's what you're talking about. I'm just saying it was relevant. Okay.
It needs to be as much as you've got regulators telling you what you have to do, what a board needs to do, what you should be looking at. If I could ask you in your own time to consider, is what other measures can we put out there to make it easy for shareholders to understand? Thirty pages might tick all the boxes of this is what's got to be done, but that's abiding by the regulators, but it's not assisting shareholders. You could put up a single-page report. I've raised this with other banks and they're considering it. If you have a look at page 45 and 46 of the annual report, somewhere around that. Fifty-four? Scorecard and the outcomes. It has got sort of two or three pages of 53 and 54. Oh, yes, you can see my highlights. I've been right through them. That's not enough.
Oh, okay. Reputation, weighting 10%, we're giving Alexis 11.4%. What's reputation based on? Absolute rep track. End of story. Nothing else. So that whole reputation is based on one measurement. That is not enough. I think I explained that the board looks at other things besides what's there. The shareholders can't see that. I think I explained the opaqueness of it. I do appreciate that you look at other things. I do appreciate that the board has discretion. I hope you can appreciate that the shareholders in the room are listening in, 400,000 shareholders. Put them up on a Q&A here. They wouldn't understand it. Something could be done to say, "Let's make this more digestible and comply with the regulators." We're always looking to improve our reporting. Thank you. Thank you.
If there are no more questions from the floor, we will now go to the questions on the phone line. Could the operator please advise if there are any questions on the phone line? If so, please introduce the speaker. Thank you. There are no questions via the phone lines. Okay. I believe shareholders have had a reasonable opportunity as a whole to discuss the 2024 remuneration report and the CEO's long-term incentive for 2025. If there are no further questions or comments, that concludes discussion on items, pardon me, three and four. Thank you, ladies and gentlemen. I will now formally propose each of the resolutions three and four as separate resolutions. If you have not completed your voting card for these resolutions or voted on the online platform, please do so now.
I would like to remind shareholders who have not cast their votes on the resolutions to do so now as the poll is about to close. We will now pause for a few minutes for shareholders in the room and online to cast their votes. For those in the room, Computershare will now go around to collect your voting card. Okay, now that voting is completed, I declare the poll closed. We have therefore completed the final item on our agenda today. The final voting results will be provided to the ASX and published on our website. We will also publish on our website a webcast and transcript of the meeting. On behalf of the AMP Board, to those who attended in person and those who joined us online and on the phone, thank you for joining us today. I now declare the meeting closed.
For those attending in person today, the board and our executive team look forward to joining you for some light refreshments in the lounge area just outside the auditorium. Thank you very much for your patience.