The effects of the Turnbull government’s changes to the superannuation system are making themselves felt at investment and insurance house AMP with high balance investors bringing forward contributions.
With the announcement of its third quarter performance data last week, the AMP said its Australian wealth management assets under management had increased A$211 million during the September quarter to A$125.3 billion.
But there was a net cash outflow of A$243 million in the quarter compared to outflows of A$327 million in the same period a year earlier. The group said that figure “reflects high levels of discretionary super contributions brought forward into Q2 17 ahead of 1 July 2017 changes to non-concessional caps.”
While there was a net outflow the previous year, it was more related to concerns about the ultimate shape of the superannuation changes then being debated by the government.
What the Q3 2017 result means is that high net worth individuals were had brought forward super contributions in the previous quarter to ensure they would not be hit by the new $1.6 million contributions cap and tax free pension limits which make super less attractive for those people. However over 98 per cent of people are unaffected by the changes.
Overall investment flows were strong with the AMP North platform of A$1.3 billion in the quarter, up 13 per cent on Q3 16. AMP Capital net external cashflows totalled A$616 million driven by strong cashflows from its China Life business and other assets.
The AMP housing loan book grew to A$19.2 billion during the quarter.
Meanwhile the ANZ bank in its full year results flagged that the upcoming sale of its OnePath wealth management business to IOOF will result in losses of about $120 million.
The funds management and insurance business pulled down the bank’s overall performance with net income of $993 million, a decline of 14 per cent on the previous corresponding period. Cash profit for that sector dropped 27 per cent on the previous year to $238 million.
Group and individual life insurance reported profit margins of $136 million, down 10 per cent on the prior year and life insurance in-force premiums were steady at $1.6 billion. Group life premiums cover insurance in superannuation.
ANZ reported a cash profit of $6.94 billion, up 18 per cent and will pay a final fully franked dividend of 80 cents per share.
CEO Shayne Elliot said the results demonstrate further progress in becoming a better, balanced, capitalised and more efficient bank, but concedes competition is fierce.
“The reality is it’s hard out there. It’s a competitive market. We’ve got our traditional competitors, new competitors and consumers are voting with their feet,” he said.
“[It’s] tough times, but that’s exactly why we’re in this transformation phase.”