Good morning, everyone. Let me start by paying my respects to the traditional owners of the land on which we hold this meeting today, which for me is the Gadigal people of the Eora Nation, and I'd like to pay my respect to the traditional owners of the land from which you're all calling in from today. Of course, I'm joined by our CFO, James Georgeson, to talk through our half year results. It is hard to believe that it's a year since I started with AMP, and I feel we're making good progress on our strategy and our commitments. Today, I wanna start with an overview of our first half results and our key achievements before handing over to James to walk through the details. We'll then update on the progress against the strategy before we take questions.
We present today's results facing into an uncertain economic environment. You know, inflation is at 6.1% and has increased at the fastest annual pace in 21 years, increasing the cost of living for our people. Central banks around the world are raising interest rates, most for the first time since the GFC, and we've seen swings in equity markets impacting investment and superannuation portfolios, large and small. We see inflation peaking this year with interest rates reaching a high of 2.6% either towards the end of or beginning of next year. Despite this, unemployment remains low, but we are likely to see a slowing of GDP next year to about 2%. We have positioned our business well to manage through these uncertain times ahead. We have a strong balance sheet and are further strengthening our capital surplus this half.
Our bank's mortgage book continues to have strong credit quality, and the majority of customers remain ahead of their repayments. We've had a productive half delivering on our strategic priorities. While we have both challenges and opportunities ahead, I'm very pleased with the efforts of the team and the progress we've made, which we wanna outline today. The first half highlights. As I mentioned, we have a strong balance sheet. The Collimate Capital sales, along with the divestments of the infrastructure debt platform and our remaining equity stake in Resolution Life, mean we're in a strong capital position, both from proceeds already received and those that will be received from the Dexus and DigitalBridge transactions expected at the end of September and November respectively. Today, I'm pleased to announce certainty around a return of capital to shareholders.
350 million were returned in the form of an on-market buyback to start immediately, followed by an additional 750 million to be delivered next year, of course, subject to regulatory and shareholder approvals. This means a total capital return of AUD 1.1 billion to our shareholders. As well as enabling a significant capital return, our balance sheet position means we are well-placed to ride through the challenges ahead and take opportunities should they arise. We will, of course, remain focused on managing any remaining surplus to deliver for our shareholders. The sales also importantly set AMP up as a simplified and focused retail management and banking business in Australia and New Zealand. While our first half profit of AUD 117 million is lower than the same time last year, much of this was predictable.
It was partly the result of strategic repricing in master trusts and platforms to ensure we had competitive positioning in that space. We announced that last year. Of course, there are also impacts from the weaker share market, but these impacts have been offset by our disciplined approach to reducing our cost base, which we continue to focus on. Specifically for the bank, the lower earnings for the period are a result of downward pressure on the NIM, which has shown improvement in the last month, as well as the credit loss provisioning from first half of last year, not repeated this time. In the competitive market, a conscious decision was made to only grow when profitable. As a result, while we still grew above market, we stepped back from driving to that two times system growth we set ourselves.
The focus on costs has meant controllable costs of AUD 45 million lower compared to the same time last year, while losses in the advice business are on track to halve this calendar year. Our statutory net profit was up significantly at AUD 481 million as a result of the asset sales and particularly the infrastructure debt sale that we completed earlier in the year. We've achieved much on the delivery of our strategy and commitments. Collimate sales have been executed and due to complete in this half. We've worked hard to reduce our cost base and simplify the organization, but there's still work to be done, and we have to be vigilant about the stranded costs emerging from the transactions. The bank remains healthy despite our decision to step back from pursuing unprofitable growth as pricing came under pressure.
Bank lending has grown above system, and while NIM was impacted during the period, we've seen some signs of recovery. In platforms, our cash flows from the IFAs measure we're particularly focused on has continued to grow strongly, up 49% on the same time last year as our advisor proposition has strengthened and we further develop relationships within that space. We've also continued to invest in the North platform's functionality and investment options to ensure it's one of the leading offers in the market. I've mentioned the reductions in our advice losses and the great progress we're making on costs in that area, and we do remain on track for halving the calendar year 2021 loss. This is a critical step as we aim for advice to be break even in 2024.
I'm also pleased that we've now established our new purpose and values, helping people create their tomorrow, and these are being embedded across AMP and embraced by our people. The second half includes the launch of new growth opportunities. Our new direct-to-consumer digital mortgage is live, with a controlled launch commencing last week. The initial offer has gone to our employees, and as one of the first customers, I was very pleased with the simplicity and ease of the process. We also have our retirement offering set for launch this half, with the team about to begin speaking to advisors about this innovative solution we'll bring to market, and we're confident we can be a market leader in this space. With the business becoming simpler and the platform and bank now having clear pathways to perform, we need to focus energy on both organic and inorganic growth opportunities.
If we look at the immediate future, it's true the environment is less certain. However, we're in a strong position to face into it and take advantage of opportunities as presented. We know we're likely to see further rate rises, but our mortgage book is strong. We've launched a digital mortgage and are well-established to attract deposits. The volatility in the investment market does impact our AUM and revenues, but it also provides the opportunity for AMP to demonstrate the value of our services and those of advisors by helping customers through more challenging times, particularly as we prepare to launch for the new retirement product. Educating our customers will continue to be a focus. While consolidation is occurring in the super industry, this disruption has seen AMP drive continued simplification in our MasterTrust business, delivering lower costs and improved investment performance.
Finally, the level of regulation in wealth management in Australia remains a key issue. We engage with the government, regulators, and industry peers as we look for a sustainable solution for advice, accessibility, and affordability. Our new retirement product is a good example of where we have alignment with the government through its Retirement Income Covenant. We're well aware of our operating environment and the external factors for our business, but I believe we're well-placed to address these and to seize opportunities when they arise. James, let's work through the detailed financials.
Thank you, Alexis, and good morning, everyone. Today, I'll be taking you through the three key areas of our first half results, the earnings of each of the businesses, our cost performance, and our capital position, including the pro forma surplus once the announced Collimate Capital sale is complete. You'll see we've continued with the enhanced disclosures of the respective divisions of Australian Wealth Management, providing detailed performance metrics for each of Platforms, MasterTrust, and advice. As we work towards the completion of the Collimate Capital sales, AMP Capital disclosures are being split between continuing and discontinued operations. Continuing operations include the China Life AMP Asset Management Company, or CLAMP, PCCP, and certain sponsor investments that will be retained by the group post the sales.
The discontinued operations include the sold or held for sale operations of infrastructure debt, global equities and fixed income, international infrastructure equity, and the domestic real estate business. We've effected the move of the multi-asset group, now referred to as AMP Investments, into Australian Wealth Management and have restated all comparatives accordingly. The extra details can be found in our investor report. On slide eight, you'll see our first-half profit summary. Our underlying profit is down 25% half-on-half. As Lex mentioned, the downturn in results was largely driven by the lower business unit earnings from the previously announced strategic pricing changes in MasterTrust and North, and lower net interest margins in the bank. Pleasingly, the loss in advice reduced materially following the sale of the Employed Advice business at the end of 2021 and the impact of our cost out work.
Our bottom line result was favorably impacted by a AUD 390 million gain on the sale of our infrastructure debt platform, partly offset by the costs associated with the separation of AMP Capital and the transformation of our existing businesses. Taking all these into account, the bottom line statutory result for the half is a net profit of AUD 481 million. The waterfall on slide nine steps through the key movements half-on-half. While I won't talk to each item, I will mention a few of the key specific movements. In AMP Bank, the decrease of AUD 38 million reflects both the lower NIM, given the competitive market environment ahead of the rate tightening cycle, and a AUD 9 million impact from the one-off loan loss provision releases in the first half of last year, which did not repeat this half.
In Platforms, the North hedging impacts of AUD 12 million post-tax were responsible for about approximately 40% of the reduction in earnings. This was mainly from the speed of the movement in interest rates during the period. As you can see, the loss in advice is on track to halve as we've guided, with the first half results improving AUD 55 million compared to the same time last year. When you look at the overall Australian Wealth Management result, the decrease of AUD 9 million from the same time last year is reflective of the resilience of the business given the pricing changes we made, as well as the market conditions that impacted the first half 2022 results. If not for the North hedging impacts, the Australian Wealth Management results for the first half of 2022 would have been higher than the corresponding period.
Turning to slide 10, where we outline the key items below underlying profit. The key items of note include AUD 22 million for client remediation and related costs that relate to the APRA enforced undertaking we committed to in November 2021, and legal costs relating to defending the class actions. There was also AUD 26 million in transformation costs, which relate to the investments to realize our cost outwork. We also incurred AUD 52 million in separation costs relating to AMP Capital as we prepare for the completion of the sales. This also includes the costs we had incurred previously to pursue the demerger. All of these were offset by other items, which was a net gain of AUD 435 million in the half, largely owing to the AUD 390 million gain on the sale of infrastructure debt.
Moving now to our business unit performances in the half, starting with AMP Bank on slide 11. AMP Bank net profit of AUD 46 million was down 45% in the half, largely due to a reduction in the net interest income and a AUD 12 million benefit last half from the loan loss provision releases, which did not recur this year. The NIM decreased 21 basis points in the half to 132 for a range of factors. Intense market competition resulting in lower variable loan margins had a 9 basis point impact, the increased growth of fixed rate home loans had about 11 basis point impact and higher liquid assets, which had a 2 basis point impact due to the unwind of the committed liquidity facility. The NIM has started to slowly improve in the second quarter, in line with the increasing rate environment.
From a growth perspective, AMP Bank's residential mortgage book grew at an annualized rate of 6.5% to AUD 22.4 billion during the half. This was approximately 1.15 times system growth, a good result given the competitive environment. Our household deposit growth was more than 4 x system in the first half, with a total growth of 12% driven by flows from customer deposits, mainly into term deposit products. AMP Bank's controllable cost is AUD 64 million, but AUD 5 million higher in the half following investments in technology as we work to digitize, automate and improve operational efficiency as we facilitate future growth. As a result, the first half 2022 cost to income ratio for the bank of 49.9% is higher.
Although we were focused on active cost management and discipline to focus on driving it lower going forward. The LCR as at thirtieth of June was 143%, reflecting the buildup of liquidity in advancement of the replacement of the CLF. Excluding the CLF, the LCR would have been 123% at thirtieth of June. Over on the next slide, on slide 12, we show additional information on the bank and our progress in growing the loan book. Pleasingly, as we pursue growth, we are maintaining the high quality of our loan book. A deliberate decision to slow growth applications was made in Q1 in order to manage NIM and maintain book quality. This can be seen on the graph on the left-hand side of this slide. Applications have since increased with a stronger end to the half year.
Approval times have also improved across the half, and the auto credit decisioning rate has remained stable at around 60%. The ongoing focus on maintaining book quality has resulted in approximately 68% of customers being owner-occupied and an average loan-to-value ratio of 66%. The dynamic loan-to-value ratio increased slightly to 59% in June, reflecting the latest property values. Arrears rates also continued to perform very well. The 30-day arrears rates improved 8 basis points to 70 basis points in the half, and the 90-day arrears rates have improved 11 basis points to 39. As the prepayment statistic chart shows on the right-hand side of this slide, 47% of our portfolio are more than 4 months ahead of their repayments, indicating the quality of our customer base.
While this has improved in recent times, this has been the case for an extended period and shows we are well-positioned coming into the uncertain economic environment. Looking forward, we expect full year 2022 mortgage growth to be in line with what we saw in the first half. However, we will continue to prioritize writing mortgages profitably, acknowledging the competitive lending market. As a result, we expect NIM to be in the range of 135-140 basis points by year-end, subject to market conditions. On Slide 13, we show the key financial metrics for Australian Wealth Management at the total level. Underlying profit decreased AUD 9.5 million - AUD 36 million. This was mainly due to the lower revenue, predominantly from the impact of previously announced competitive repricing MasterTrust and Platforms and hedging volatility in the North guarantee product.
This was mostly offset by AUD 48 million of controllable cost reductions from our planned cost out activity and the impacts of the sale of the Employed Advice business at the end of 2021. AUM of AUD 126 billion was AUD 16 billion lower than December, mainly reflecting lower investment markets, as well as AUD 1.9 billion of net cash outflows. The total net cash outflow for the half has improved to an outflow of only AUD 1.9 billion from a AUD 3.6 billion net outflow last year. This improvement was largely attributable to lower outflows across both Platforms and MasterTrust. As expected, total wealth management revenue margins were down 14 basis points from the first half of last year and 6 basis points from the second half of last year.
The movements primarily relate to the impact of the MasterTrust simplification and pricing changes in the North platform. Turning to slide 14, where as I mentioned, we will continue to disclose the key metrics of each of the business lines, starting with Platforms. The Platforms' underlying profit for the half was AUD 36 million, AUD 30 million lower than the same time last year. This was due to the impact of the strategic pricing changes we implemented in 2021, lower investment markets, the North hedging impacts, and higher controllable costs as we support business growth and the strategy. As mentioned, the hedging impacts of AUD 12 million post-tax were responsible for approximately 40% of the decrease in earnings in the half, reflecting the speed of the movement in interest rates during the period.
Platform revenues fell as expected from 57 basis points to 49 basis points from the previously announced pricing actions across MyNorth, North, and Summit. As you can see from the chart, Platforms recorded net cash inflows of AUD 464 million, up from AUD 115 million net cash outflow for the same time last year. Within Platforms, the North product recorded AUD 1.3 billion in net cash flows, with the business gaining traction in the IFA market and the IFA flows of AUD 750 million in the half, up 49% on the same time last year. On slide 15, we show the results for MasterTrust, which were subdued underlying earnings in the half, reflective of the lower margins and weaker investment markets. The MasterTrust underlying profit was AUD 27 million, which decreased from AUD 63 million in the first half of last year.
This was due to the competitive pricing changes and the MasterTrust simplification work, which were partly offset by lower costs from our ongoing focus on operational efficiency. The net cash outflows of AUD 1.6 billion in MasterTrust improved from an outflow of AUD 2.6 billion in the same time last year. This half also included approximately AUD 300 million of a lost corporate super mandate. MasterTrust AUM of AUD 55.2 billion was 12% lower than December, driven by the weaker investment markets and the cash outflows. MasterTrust revenue margins compressed 24 basis points to 67 basis points as expected in the period. Turning to Advice on slide 16.
As mentioned earlier, the loss of AUD 30 million in the half was AUD 55 million lower than the same time last year, reflecting the significant benefits from our Advice reshape work, the move to a contemporary service model, and the sale of the Employed Advice business. The Advice revenue benefited from AUD 18 million of one-off impairments in the same time last year that did not repeat this half, and these were partly offset by a reduction in revenue from our Employed Advice business post the sale and the divestment this half of the majority-owned aligned practices. The continued focus on costs is reflected in lower controllable costs in the half. Variable costs were also lower as a result of the sale of the Employed Advice business.
We do expect the second half results for Advice to be weaker than the first half, given there were some small one-off gains from the divestments in the half. However, we remain on track to halve the loss in 2022 by approximately 50%. Moving now to the New Zealand result on slide 17. Our New Zealand business continues to perform well, with resilient earnings in the half despite investment market impacts. The net profit was down 11% to AUD 17 million accordingly. AUM of AUD 10.2 billion decreased 16% from December, predominantly driven by the lower equity markets. 1H 2022 controllable costs of AUD 18 million were unchanged on the same time last year, reflecting the ongoing efforts to offset inflationary pressure observed across the economy and simplifying the operating model following the conclusion of New Zealand's term as a KiwiSaver default provider.
Turning to slide 18 and the AMP Capital results. Overall financial results for AMP Capital were up 36% to AUD 57 million in the half. The continuing operation earnings were up 63% to AUD 26 million on the back of higher contributions from our joint venture investments. Discontinued operations and held for sale businesses' earnings of AUD 31 million were also up 19%, reflecting the higher sponsor investment earnings, offsetting the impact from the sale of infrastructure debt and the GEFI business during the period. AUM-based revenues did fall 29% to AUD 150 million, reflecting the sale of both of those businesses. The seed and sponsor income increased AUD 10 million on the same time last year as a result of the strong performance, primarily on our sponsor investments in real estate funds. Performance and transaction fees remain subdued again as the business transitions to closed-end funds.
Controllable costs of AUD 161 million decreased 25% compared to the same time last year, reflecting the impact of the divestments. On slide 19, we show the breakdown of the main items within the Group Office division. Group Office costs reduced 3% to AUD 31 million, reflecting the benefits of our cost at work. Interest expense on corporate debt was 25% lower at AUD 18 million as a result of lower debt levels following AUD 800 million of repayments last year. Group Office investment income was AUD 41 million in the half, with higher earnings from our China investments and hedging gains in the corporate office offsetting the loss of returns post the disposal of our remaining stake in Resolution Life.
As Alex said, during the half, we received a cash dividend of approximately AUD 14 and a half million from CLPC, the second consecutive annual cash dividend we have now received. Turning to controllable costs on slide 20. This chart outlines the controllable cost movements across the half. Disciplined cost management has reduced costs by 11% from the first half of last year, ending this half at AUD 378 million. Key movements in the half include a AUD 38 million increase following the transition of AMP Investments, formerly the MAG Group, into Australian Wealth Management, a AUD 9 million increase from CPI and other movements, but offsetting this was AUD 7 million reduction in project costs and AUD 47 million of reductions from our cost out program through the simplification of organizational structures, infrastructure, and technology. Overall, this is a strong result for costs.
With the actions we've been taking, bringing the cumulative cost reductions from 2019 to AUD 315 million, concluding the previously announced AUD 300 million cost out program. We expect to report full year 2022 controllable costs of approximately AUD 795 million, including AMP Investments, in line with our prior guidance. This will represent a AUD 50 million net reduction from the full year of 2021. On slide 21, we show the capital position as at the 13th of June. This chart breaks down the composition of our capital base, clearly showing the minimum regulatory requirements, the board buffer, and the resulting surplus held above those two amounts. As you can see, at the 13th of June, we have a strong capital position of AUD 1.45 billion surplus.
On slide 22, we have our capital waterfall, which steps through the capital movements across the half. The first three columns reflect the AUD 959 million uplift from the first half 2022 earnings, and the successful completion of the sales of infrastructure debt and our remaining equity stake in Resolution Life. There was AUD 20 million of net business capital usage, mainly driven by ongoing growth in the bank, offset by lower wealth management requirements following the equity market falls. We also reviewed our target capital levels and reduced the capital being held as a board buffer, releasing AUD 103 million of capital in the half. As Alexis mentioned earlier, we have announced a AUD 1.1 billion return of capital to shareholders today.
This will comprise of an on-market share buyback of AUD 350 million to commence immediately, and a further AUD 750 million of capital returns planned in 2023, subject to regulatory and shareholder approvals. Accordingly, and in line with our prior guidance, the board resolved not to declare a first half 2022 interim dividend. In addition, as we previously have guided, we also expect to pay down approximately AUD 400 million of corporate debt with the sale proceeds. Over to slide 23, we highlight our pro forma capital position and the expected key movements from the trade sales we've already announced.
The key movements include an AUD 712 million uplift from the announced trade sales to Dexus and DigitalBridge, net of the net assets of the businesses being sold, and the residual amounts for both our separation transformation programs, approximately AUD 85 million for each. The capital position in the chart excludes all future earn-out amounts and future business unit growth and operating results. Beyond the 1.1 billion of capital announced capital returns today, the remaining surplus will be used to cover the impact of APRA's unquestionably strong capital requirements and a further pay-down of corporate debt. We will also explore opportunities for investment and/or additional capital returns. Net tangible assets at the 13th of June were AUD 1.28 per share, which is before the announced trade sales to Dexus and DigitalBridge and any of the earn-outs.
Slide 24 highlights our guidance points for the various businesses in 2022. The key call-outs are as follows. In AMP Bank, we are targeting a full-year NIM in the range of 135-140 basis points, and mortgage book growth in line with the first half of 2022, subject to market conditions and interest rate repricing opportunities. In Advice, we expect the full-year 2022 underlying loss to halve from the full year of 2021, reflecting the exit of Employed Advice, rightsizing the network, and our cost outwork. In MasterTrust, we now have an end-to-end superannuation business in place following the transfer of AMP Investments and expect margin compression to slow down materially. Platforms' revenue margins at the end of this year are expected to be in line with what we reported at the first half.
At a total wealth management level, we expect full-year 2022 AUM-based revenue margins to be approximately 55 basis points, reflecting the full run rate of the MasterTrust simplification, so only a small reduction from where we are today. The New Zealand NPAT is expected to be marginally lower in the second half, given the volume headwinds and the lower general insurance arrangements. Stepping back, our half-year results have shown we're well-placed despite the challenging macroeconomic environment we're facing into. Our earnings were resilient but lower when compared to the prior period, primarily as the deliberate repricing activities were not fully offset by planned cost reductions. The lower investment markets and higher competitive lending market created headwinds not foreseen at the start of the year.
We are seeing the benefits from the cost out program, with businesses delivering a net AUD 45 million of reduction in controllable costs in the half, and our controllable costs are tracking to plan despite inflationary headwinds. Our strong capital position, supported by the agreed sales of Collimate Capital, allow us to commence the capital return initiatives immediately, further pay down of corporate debt whilst continuing to invest in the growth of the business. I'll now hand back to Alexis to talk through the progress in our strategic priorities.
Thanks, James. I think it's important to remind ourselves of the priorities we set for the FY 22 year and how we are delivering on these. Firstly, complete the separation of Collimate Capital. The sales are on track. We've made good progress on giving our people clarity for the future, as well as planning the transition. The sales not only realize value and deliver capital, but importantly, simplify and sharpen the focus of the ongoing business. With the sales almost complete, we can redirect energy into our ongoing goal of repositioning AMP as a simplified and focused business. Two, reduce the cost base. We continue to demonstrate our capability to reduce costs. We're achieving this by simplifying our organizational structures, infrastructure, and technology.
We do need to maintain focus on the group costs and minimize the impact of stranded costs from both the Collimate and Resolution Life transactions. Investment in technology will also be required to deliver further agility and simplification. As you know, the bank has been a very important role in AMP's future. We knew our target to continuing to grow 2x the system was ambitious. I was also very clear at our last results that while we wanna grow the bank, we'd only do so where profitable and producing reasonable NIM. We did continue to grow above system for the period. However, we actively pulled back to preserve our margin, meaning we finished at 1.15 times system growth.
We do continue to deliver improvements in customer service and have also increased efficiency by migrating our technology core to the cloud, and that will help us into the future. We've launched new technology to brokers, and over 60% of applications are now being processed through the auto credit provisioning. I'm also very proud of the team's achievement in setting up our capability in a direct-to-consumer space in just 120 days. Looking ahead, we need to continue to focus on credit quality and customer service, but also on that cost-to-income ratio and NIM. IFA flows in platforms, number four. Our North proposition continues to gain traction with independent financial advisors, with cash inflows up 49% on the same time last year. This is being driven by enhancements to our investment choice and functionality on the North platform.
We've improved the digital experience with a new app that's designed to make it easier for advisors to support their clients. We've more than doubled our partnered management portfolios, and we've introduced new investment options and ETFs. We'll launch the new entitlement offer this half and we'll be making further digital experience and functionality enhancements. Five, explore new business opportunities. The work we've done on simplification and repositioning allows us time to explore new business opportunities. As I mentioned, we've got the new digital mortgage. We're launching our retirement product to retail customers soon. We have to maintain focus on the performance of our current businesses, but we'll look at inorganic and organic growth opportunities that help with scale or delivering new capabilities. Last, but by no means least, purpose and values.
I'm very pleased with how the purpose and values have been embraced by our employees, and we'll continue to focus on initiatives that drive a high-performance culture 'cause it's a key enabler for our success. We're making progress on our path to the new AMP. I'm pleased with the progress we've made in achieving the priorities we set ourselves for the 2022 calendar year. We've committed capital returns to our shareholders, and we're entering an exciting period for AMP. While we still have much work to do in simplification, proving we can grow the bank responsibly and managing positive cash flows in our wealth management business, we have a plan that the executive and I are committed to delivering. We understand we're entering less certain times, but we have a strong balance sheet and a more focused portfolio, and we're better equipped to adapt to this changing environment.
Thank you, and I'll now hand to the operator for questions.
Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. To cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Matt Dunnam from Bank of America. Please go ahead.
Yeah. Thank you very much for taking my question, Alexis and James. Just wondering if I could clarify on the AUD 2 billion of surplus pro forma capital you're talking about. Obviously, you flagged AUD 1.1 billion of capital returns, AUD 400 million of debt paydown. You've got AUD 129 million surplus in the bank. Is that enough to meet the APRA capital changes? Then presumably, you know, there's something left over for acquisitions. Are you able to talk about the quantum, the size of a potential acquisition and where it would come?
Thanks, Matt. The AUD 129 million we hold in the bank, you know, I think it'll go towards the new capital requirements that will come in from next year and in the following years, but it won't cover all of it. I guess as our sort of stated strategy over the last 18 months is to grow the bank, as part of the core growth strategy. You know, I think the bank will consume more capital over time. Look, that helps, but as I said, you know, I'm just trying to explain the difference between the AUD 1.1 billion and the sort of the AUD 2 billion capital surplus. You know, some of that will need to go to continuing to fund the growth in the bank.
Matt, just your question on our future inorganic growth. I mean, there's nothing definitive I wanna talk to you about today, but, you know, I think we've been very clear that, you know, scale is important to us, as is capabilities, particularly in that digital and data space where we need to be better. I mean, we're in a position where some of the asset values have come off there, so we'll just be very diligent about looking at those. Thank you, operator.
Thank you.
Thank you. Your next question comes from Nigel Pittaway from Citigroup. Please go ahead.
Hi. Good morning. Just a question on the advice transformation. It looks as if, basically that, I thought a key objective of the advice transformation was to improve the number of advisor numbers to practice. Yet if you look at what you've disclosed on sort of 29 of the investor pack, there seems to be only a very marginal improvement, maybe a bit more at Charter than anywhere else. I was just wondering if you could talk to why that hasn't improved more as you've gone through the transformation.
Thanks, Nigel. Look, I think we're trying to move our advice business into a contemporary advice business where really our advisors are prepared to pay for the services that we offer, and we'll offer both the standard package as well as additional ones. I think the revenue per advisor is starting to improve there, and if I talk to our team, it continues to improve in the third quarter of this year. The advisor numbers are down slightly, but that's probably what we expected given we're going through this transitionary period.
Okay, there's still no real improvement in number of advisors per practice. Really, the advisor numbers have gone down without sort of the consolidation of practices as was originally intended.
I think a lot of that consolidation, Nigel, happened through 2021 as we went away from the one- and two-man practices into the larger practices. There might be a little bit of improvement to come there, but I think a lot of that hard work's been done.
Okay, fair enough. I'm sure you're not gonna tell me too much about the retirement product, but I was just wondering, you know, is there anything you can say about it as to where it'll be targeted? Secondly, just to confirm that this is something you're doing totally off your own bat without using any other partner.
Yeah, you're right. I'm not gonna go into too much detail today 'cause I think we're pretty excited about the launch of that, which I'm hoping will occur in October. Our team is starting to talk to the advisors, as we said before. We are doing that with our own team. You know, we will look to partner for some aspects of that, but it's been driven, the product development has been driven from our own team and the capability will be internally. It will be an advised proposition. Watch this space.
Okay, thanks very much.
Thank you, operator.
Thank you. Your next question comes from Lafitani Sotiriou from MST. Please go ahead.
Good morning, everyone. A few questions from me. The first is in relation to the NTA. Thank you for providing the AUD 1.28, and you mentioned the two additional transaction sales has not been included. Is it possible to provide a pro forma NTA, including the rough wash out of infrastructure, equity and property platforms being sold? Can you just also dive back into that excess capital number? Just broadly speaking, there's AUD 2 billion to start with, 1.1 being paid down, being returned to shareholders, AUD 400 million being paid back in debt. There's about AUD 500 million left. Retained earnings this half will be another 100. 600 by the end of the year, AUD 200 million of that probably earmarked for the bank.
Does that mean you've got about AUD 400 million to play with there?
Maybe I'll take a question, then let James talk about the details. Thanks, Laf. I'll let him talk to the NTA. In terms of the capital, I mean, your numbers are absolutely right, but we haven't completed the transactions yet. Look, I don't think that I'm not calling out any issues there, but we wanna complete the transactions before we start to think about what we might do with the excess, which is exactly as you have articulated. James, do you wanna talk through the NTA?
Yeah. The NTA, Laf, on the chart on the pro forma, I think the thing to remember there is, you know, we talk about AUD 712 million from the column eight capital transactions. We've already got the AUD 300 million of capital synergies included within our NTA. It's not released from a capital perspective. You know, look, there's AUD 0.07 or AUD 0.08 of NTA once you settle the transactions, from the pro forma that we've got today. And you know, the growth sort of roughly speaking to the pro forma you're talking about by the end of the year is kinda like in the rough ballpark. You know, that gap between the AUD 1.1 billion and the AUD 2 billion pro forma, as I said, there's three core components of that.
The bank is unquestionably strong. There is repayment of a further hybrid note at the end of 2023. Then we've got a bucket that we're sort of thinking about whether it's either M&A or further capital returns. From a quantum perspective, we probably think about those as a third of each of those buckets. You know, if there's a couple hundred million there for bank growth, there's a couple of, I think, AUD 250 million for the hybrid instrument, and there's sort of AUD 300 or so for that M&A and further capital return, depending on where we land. That's kind of the way we've been thinking about it.
Yeah. Okay. I just want to follow up on the guidance that's been stated. I think previously, Lexi, you've mentioned that there's an aspiration to move to 2% market share in the bank. I think that's a doubling by financial 2025. Can you just refresh the bank guidance over the medium to longer term, what your aspiration is there? Just with group office, the numbers, staff numbers seem to go up in the last half. There's 1,242 staff at group office, and there's AUD 20 million odd stranded group costs. Is this an area that you'll be focusing on, I guess, in the next financial year?
Yeah, a couple of big questions there. Firstly, if I look at the bank, it would be fair to say that the market conditions, particularly the competitive market conditions in mortgages, probably changed a little more quickly than we'd anticipated. Clearly, you can see that we're paying for our funding there. We still do have that ambitious target of growing at 2 times system. You can see, Laf, that we really pulled back from that in the first half. You know, I think we started to see some improvements in the latter half of the first half and into this quarter. I just wanna be cautious about that.
I'm not saying we're pulling away from our long-term ambition to grow it two times, but it is ambitious, and I think we have to realize that in the current market conditions. When it comes to group office, I can 100% assure you that we're very focused on employee numbers, and as I've said, multiple times through the presentation, very much aware that we have to be vigilant about those stranded costs that are gonna emerge from the transactions we've done. In terms of the actual numbers, do you have any comments on that?
The cap of the stranded costs, Laf, we've framed around the Collimate Capita l sales is a run rate of about AUD 20 million, is the net stranded costs we'd see. That's the gross number, I guess. We'd be hoping to sort of attack that and, you know, minimize that as much as we can. It primarily relates to sort of core group infrastructure services that are charged to AMP Capital today that won't be able to be charged going forward. We wouldn't expect too much of that to hit in the 2023 year because the trade sales will still be being unwound, and those services will be able to be funded through transition work.
It's probably more of a back end of 2023, 2024 for that to come through, and we'll obviously guide at February around how we're going in attacking that AUD 20 million.
All right, great. Thank you.
Thanks, Laf. Thank you, operator.
Thank you. Your next question comes from Kieren Chidgey from Jarden. Please go ahead.
Morning, guys. Two questions, if I can. Maybe just starting on the bank, and Alexis, you were touching on it before in regards to your previous target of two times system growth. Just wondering sort of how, you know, what levers you need to pull to generate above system growth at a return above your cost of capital, just given that's come down to 7.8% or 7.2%. I can't remember the exact number this period, despite no bad debts being booked through the P&L this half. It doesn't seem, you know, sustainable to be growing at those sort of levels in this environment. Do you think that's a temporary thing? Do you have to take costs out?
You know, what are the levers to achieve above system growth at above cost of capital returns?
Thanks, Kieren. Thanks for that question. I think, you know, growing is an easier thing to do. Being responsible about that growth is important, and there's a couple of things I think we have to focus on. Firstly, if you look at the NIM waterfall that James talked through, you can clearly see that we only got a one basis point benefit from funding there. We're paying for, you know, for our funding through the cycle. I think there's one thing we really need to focus on, which is improving our transaction banking capability. It hasn't been a focus for us in the past, but that's one thing we need to do in order to be able to keep customers through the cycle.
The second thing that you just highlighted was just making sure we continue to focus on costs. That may be some costs directly in the bank, but I think more appropriately, the allocated costs that come through to the bank from the growth. They're the two things I would point out as an immediate focus for us.
All right. Thanks. The second question, just on the advice business. I think you said you're still on track to halve the losses from last year. Previously, you'd flagged sort of the ambition, I guess, is to move to break even by 2024. In previous discussions, that sort of residual loss post this year in terms of moving fully break even seemed to hinge a lot on regulatory reform and sort of an easing of some of the burden that's been put on advisors post Royal Commission. Just wondering whether or not you're sensing enough change there and, you know, has your confidence around that regulatory reducing improved over the past six months?
That's a big question. Firstly, certainly easing in the regulatory environment would help us in achieving that break-even position by 2024, so I don't think we should deny that. I have to say, and I've been in the industry quite a while, over the last year, six months even, I think we've seen a real preparedness for both regulators, government, and the industry to really lean into this problem. It's not like our retirement system has become any more simplified, so advice is clearly something many, many of our customers need. Having that be more affordable and accessible, I think is something the whole industry, and I include regulators and government in that, are willing to look at. I mean, even yesterday, if you look at some of the announcements from the minister, it seems that there's a real willingness to make the change.
I'm probably as optimistic as I've been in this space about there being some change in that area. I mean, we're not walking away from that position about the 2024 for advice.
All right. Thank you.
Thank you, operator.
Thank you. Your next question comes from Simon Mawhinney from Allan Gray. Please go ahead.
Hi. Good morning, both. Just checking you can hear me.
Yes. Thanks, Simon.
I'm sorry to harp on the capital outcome. There's been a lot of talk of the walk forward from AUD 1.1 billion-AUD 2 billion. Two of the items were the repayment of corporate debt of AUD 400 million and capital injections into the bank. Neither of those impact capital. In the former capital is stated net of debt, and in the latter, it's just moving capital from one place to another.
Do you wanna comment on that?
I was hoping you could explain that a bit.
Yes. Simon, you're right. The AUD 400 million of corporate debt paydown doesn't impact our capital base. That is not included in the movement here. The capital we're talking about for the holding, you know, that goes to the part of the bank is more about where the unquestionably strong and counter-cyclical buffers are coming, which are more capital impulses that are coming next year. It's more to do with we'll be effectively utilizing some of the surplus. You're right, it's taken from one pocket to another, but it effectively means it's not available for distribution. That's that one. The other point, the other corporate debt I flagged to pay down is a hybrid instrument that backs the group office capital base.
That one is more as we refinance that or pay that off, it won't form part of the capital base. It will kind of effectively, as you say, it doesn't come out of net assets, but it's effectively not gonna have it as eligible capital. That's the reason why that sort of explains part of the movement.
Okay. On the AUD 400 million, though, that that's not a valid reason why AUD 1.1 billion of capital return couldn't be AUD 1.5.
Correct. Yes, as we're not saying that. The 1.1 billion is I guess what we're sort of saying is the right balance at the moment. Then, you know, as I said, there's three drivers or three buckets explaining the difference between the 1.1 billion and the 1.9 billion or AUD 2 billion we'll get to by the end of the year. Yeah. Absolutely right. The paydown of corporate debt doesn't impact our capital base and is not the reason for that. We just think the 1.1 billion is right for now, given the uncertainty of the environment that we're looking into, as well as the trade sales, two further trade sales not yet being completed.
Okay. Yeah. I probably could have asked my question differently. Why is the 1.1 not 1.5?
Yeah.
But, um-
I think we understood what you were asking, Simon.
Yeah.
I mean, it's a fair question if we look at the surplus today, but I think as James said, we think it's the right number for today. The second, the DigitalBridge and Dexus sales haven't been completed yet, and we're moving in uncertain times. We wanna make sure that balance sheet is strong, but it's something we'll continue to watch, as I said, and reevaluate as we get towards the end of the year.
Thank you.
Thank you, operator.
Thank you. Your next question comes from Andrei Stadnik from Morgan Stanley. Please go ahead.
Good morning. Can I ask my first question around wealth? The wealth flows were better. Can you talk a little bit about what drove the better outcome of wealth flows? Do you have any targets for when you'd like to see those go positive?
I didn't hear that, so can you?
Wealth flows. Andrei, look, we've a couple of drivers. You know, we've had continuing improvement overall in the sentiment towards AMP. You know, post the Royal Commission was very negative, and you can sort of see from our graph on MasterTrust the cash flows have started to really. You know, there's still net outflow, but the trajectory is more positive. The repricing changes that we made in MasterTrust, you know, they're substantial, and they've hit the profit this year, but they've really started to sort of remove one of the reasons why an advisor or a customer would switch away from AMP. That's on the MasterTrust side. Then on North, look, again, we've repriced the product back to very competitive against the sort of the core platforms in this area.
Edwina and the team are focusing hard on penetrating the IFA market, which we haven't really gone after more recently. Again, on the platform slide, you can sort of see our improvements in IFAs and North flows. They're the two drivers. One, focusing on growth from an IFA perspective, and two, the pricing changes have really stopped some of the outflows and the sentiment on the books.
I think I'd add to that in that there is no deficiencies in terms of the proposition. When we sat here a year ago, we were talking about really big gaps around managed portfolios on the platform, particularly where we didn't have a competitive-
Yeah.
a compelling proposition, and all of that's been changed now, as well as really, you know, leaning back into the advice market and saying we're serious about it.
Yeah. On your question on sort of what's our trajectory for net positive, we've guided that, you know, I think by the end of the 2024 year, we would be at a net overall positive, for wealth cash flows. The Platforms business is obviously positive today, and then that's really improving MasterTrust and getting the Platforms number to grow from where it is today.
Thank you. My second question, I want to ask, you know, what kind of reinvestment do you think, you know, you need to undertake across wealth and bank to stay competitive?
Look, I think we have really, in the wealth space, it's maintenance of the competitive proposition. You know, we spent a lot of money during this year making sure platforms then last year were priced well, the service proposition was compelling. We had solutions for the customers of our advisors out there. Now, we need to keep that fresh, and we need to keep investing in that, and that's in our margin guidance. I think when it comes to the bank, you see that we've launched the new digital proposition. That didn't cost a lot of investment for us. Again, it's an ongoing investment then, as opposed to any one massive one-off that we'd be looking to do, and that again, is included in our forecast.
Andrei, we spend about AUD 120 million-AUD 130 million on projects or investment spend every year. It's embedded in our controllable cost numbers that you see disclosed in the investor report. You know, we've tried to redirect that more towards the platforms and the bank, given that's where our growth agenda is. We think that hopefully is sufficient from a go-forward perspective. You know, the work we've done on the digital mortgage work is we, you know, we partnered with another firm rather than build it ourselves. That was part of the reason around doing that was to make sure we manage our investment spend, but also try to get the right outcomes for the business.
Thank you.
Thank you. Thank you, operator.
Thank you. There are no further questions at this time.
Well, thank you very much. Thank you everyone for listening to us today. We have our investor relations team are always available to answer any detailed questions, and I look forward to engaging with many of you over the coming days. Thank you very much for today.
Thank you.