AMP Bank Limited 2014 Financial Statements

47 Pages·2015·0.49 MB·English

AMP Bank Limited
ABN 15 081 596 009

Financial Report
for the year ended
31 December 2014
AMP Bank Limited
ABN 15 081 596 009
FULL YEAR FINANCIAL REPORT
31 December 2014
Table of Contents

DIRECTORS’ REPORT ........................................................................................................................................... 1
AUDITOR’S INDEPENDENCE DECLARATION ..................................................................................................... 3
INCOME STATEMENT ............................................................................................................................................ 4
STATEMENT OF COMPREHENSIVE INCOME ..................................................................................................... 5
STATEMENT OF FINANCIAL POSITION ............................................................................................................... 6
STATEMENT OF CHANGES IN EQUITY ............................................................................................................... 7
STATEMENT OF CASH FLOWS ............................................................................................................................ 8
NOTES TO THE FINANCIAL STATEMENTS ......................................................................................................... 9
1. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ........................... 9
2. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS ..................................... 17
3. NET INTEREST INCOME ................................................................................................................................ 18
4. OTHER INCOME AND OPERATING EXPENSES ........................................................................................... 19
5. INCOME TAX ................................................................................................................................................... 20
6. DEBT SECURITIES .......................................................................................................................................... 21
7. LOANS AND ADVANCES ................................................................................................................................ 21
8. ASSET QUALITY .............................................................................................................................................. 22
9. OTHER ASSETS .............................................................................................................................................. 22
10. DEPOSITS AND OTHER BORROWINGS ..................................................................................................... 23
11. DEBT SECURITIES ON ISSUE ..................................................................................................................... 23
12. PROVISIONS ................................................................................................................................................. 23
13. SUBORDINATED DEBT ................................................................................................................................ 24
14. OTHER LIABILITIES ...................................................................................................................................... 24
15. DIVIDENDS .................................................................................................................................................... 24
16. CONTRIBUTED EQUITY ............................................................................................................................... 25
17. COMMITMENTS ............................................................................................................................................. 25
18. AUDITOR’S REMUNERATION ...................................................................................................................... 25
19. RELATED PARTY DISCLOSURES ............................................................................................................... 26
20. NOTES TO THE STATEMENT OF CASH FLOWS ....................................................................................... 27
21. GROUP CONTROLLED ENTITY HOLDINGS ............................................................................................... 29
22. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION .................................................. 30
23. CAPITAL ADEQUACY.................................................................................................................................... 41
24. EVENTS OCCURRING AFTER THE REPORTING DATE ............................................................................. 42
DIRECTORS’ DECLARATION .............................................................................................................................. 43
Registered Office:
33 Alfred Street
Sydney NSW 2000 Australia

AMP Bank Limited, a company limited by shares, is incorporated and domiciled in Australia.
AMP Bank Limited

Directors’ Report
for the year ended 31 December 2014

The directors of AMP Bank Limited (the Company) present their report on the consolidated entity (the Bank) consisting of

AMP Bank Limited and the entities it controlled for the financial year ended 31 December 2014.

Directors

The directors of the Company during the year ended 31 December 2014 and up to the date of this report are shown below.
Directors were in office for this entire period except where stated otherwise.

Paul Fegan (appointed as Chairman and director, 1 March 2014)
David Morris (resigned as Chairman, 1 March 2014, resigned as director 12 November 2014)
Michael Lawrence (Managing Director)
Patricia Akopiantz
Richard Allert (resigned 8 May 2014)
Robert Caprioli (appointed 1 January 2014)
Gordon Lefevre (appointed 1 March 2014)
Joe Pollard (appointed 12 August 2014)
Collin Storrie (resigned 28 February 2014)
Trudy Vonhoff

Principal activities

AMP Bank Limited is an Australian retail bank offering residential housing loans, deposits, transaction banking, and self-
managed superannuation fund products with around 100,000 customers. It also has a portfolio of practice finance loans. The
Bank distributes through brokers, AMP aligned advisers, and direct to retail customers via phone and internet banking.

Review of operations and results

The result for the year ended 31 December 2014 was a consolidated net profit after tax of $92m (2013: $82m).

Dividends

During 2014, the Bank declared and paid $20m (2013: nil) dividends to its immediate parent company, AMP Financial
Investment Group Holdings Limited. Details of dividends paid and declared during the year are disclosed in note 15 of the
financial report.

Significant changes in the state of affairs

There have been no significant changes in the state of affairs of the Company during the year.

Environmental regulations

The Company’s operations are not subject to any particular and significant environmental regulation under a Law of the
Commonwealth or State or Territory.

Events occurring after the reporting date

On 11 February 2015, AMP Bank Limited announced a final dividend of $12.75m.

With the exception of the above, the directors are not aware of any matter or circumstance that has arisen since the end of
the year that has significantly affected or may significantly affect the consolidated entity’s operations in future years, the
results of those operations in future years, or its state of affairs in future years which is not already reflected in this report.

Likely developments

In the opinion of the directors, disclosure of further information about likely developments in the Bank’s business is
commercially sensitive and would likely be detrimental and result in unreasonable prejudice to the Company.
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Ernst & Young Tel: [phone]
680 George Street Fax: [phone]
Sydney NSW 2000 Australia ey.com/au
GPO Box 2646 Sydney NSW 2001
Auditor’s Independence Declaration to the Directors of AMP Bank
Limited
In relation to our audit of the financial report of AMP Bank Limited for the financial year ended 31
December 2014, to the best of my knowledge and belief, there have been no contraventions of the
auditor independence requirements of theCorporations Act 2001 or any applicable code of professional
conduct.
Ernst & Young
Richard Balfour
Partner
29 March 2015
A member firm of Ernst & Young Global Limited
Liability limited by a schemeapproved under Professional Standards Legislation
AMP Bank Limited
Income statement
for the year ended 31 December 2014

Consolidated Company
Dec 2014 Dec 2013 Dec 2014 Dec 2013
Note $m $m $m $m
Interest income 3 801 788 793 778
Interest expense 3 (616) (624) (617) (620)
Net interest income 185 164 176 158
Fee and commission income 11 11 18 17
Other income 4 2 - 2 1
Impairment expenses (2) (2) (2) (2)
Operating expenses 4 (65) (56) (63) (55)
Income tax expense 5 (39) (35) (39) (36)
Profit for the year 92 82 92 83

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AMP Bank Limited
Statement of comprehensive income
for the year ended 31 December 2014

Consolidated Company
Dec 2014 Dec 2013 Dec 2014 Dec 2013
$m $m $m $m
Profit 92 82 92 83
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Cash flow hedges (1)
- losses in fair value of cash flow hedges (27) (8) (27) (8)
- income tax credit 8 2 8 2
- net gains transferred from profit for the year 22 25 22 24
- transferred from profit for the year - income tax expense (6) (7) (6) (7)
(3) 12 (3) 11
Other comprehensive income for the year
Total comprehensive income 89 94 89 94
Footnote:
(1) Cash flow hedge movements relate to interest rate swaps used to manage the Bank's interest rate risk on its housing loans and
deposits portfolio.

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AMP Bank Limited
Statement of financial position
As at 31 December 2014

Consolidated Company
Dec 2014 Dec 2013 Dec 2014 Dec 2013
Note $m $m $m $m
Assets
Cash and cash equivalents 20(a) 2 16 2 16
Due from banks 20(a) 422 372 353 307
Derivative financial assets 34 31 37 31
Debt securities 6 2,334 2,797 2,334 2,797
Loans and advances 7 14,569 13,391 14,569 13,391
Other assets 9 7 6 7 6
Deferred tax assets 5 28 28 29 25
Total assets 17,396 16,641 17,331 16,573
Liabilities
Due to banks 698 405 698 405
Derivative financial liabilities 40 45 40 25
Deposits and other borrowings 10 9,977 9,866 9,977 9,866
Intercompany tax payable to head entity 24 21 24 21
Debt securities on issue 11 5,870 5,578 1,658 1,714
Provisions 12 4 3 4 3
Due to controlled entities - - 3,977 3,599
Subordinated debt 13 150 150 150 150
Other liabilities 14 8 7 178 228
Deferred tax liabilities 5 - 10 - 6
Total liabilities 16,771 16,085 16,706 16,017
Net assets 625 556 625 556
Equity
Contributed equity 16 444 444 444 444
Reserve (12) (9) (12) (9)
Retained earnings 193 121 193 121
Total equity 625 556 625 556

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AMP Bank Limited
Statement of changes in equity

for the year ended 31 December 2014

Equity attributable to shareholders of AMP Bank Limited
Cash flow
Contributed hedge reserve Retained
equity (1) earnings Total equity
$m $m $m $m
Consolidated
31 Dec 2014
Balance at the beginning of the year 444 (9) 121 5 56
Profit - - 92 9 2
Other comprehensive income - ( 3) - (3)
Total comprehensive income - (3) 92 8 9
Dividends paid - - (20) ( 20)
Balance at the end of the year 444 (12) 1 93 6 25
Consolidated
31 Dec 2013
Balance at the beginning of the year 444 (21) 3 9 4 62
Profit - - 82 8 2
Other comprehensive income - 12 - 12
Total comprehensive income - 12 82 9 4
Balance at the end of the year 444 (9) 121 5 56
Cash flow
Contributed hedge reserve Retained
equity (1) earnings Total equity
$m $m $m $m
Company
31 Dec 2014
Balance at the beginning of the year 444 (9) 121 556
Profit - - 92 92
Other comprehensive income - (3) - (3)
Total comprehensive income - (3) 92 89
Dividends paid - - (20) (20)
Balance at the end of the year 444 (12) 193 625
Company
31 Dec 2013
Balance at the beginning of the year 444 (20) 38 462
Profit - - 83 83
Other comprehensive income - 11 - 11
Total comprehensive income - 11 83 94
Balance at the end of the year 444 (9) 121 556
Footnotes:
(1) The cash flow hedge reserve represents the cumulative impact of changes in the fair value of derivatives
designated as cash flow hedges which are effective for hedge accounting. Hedge gains and losses are transferred to
the Income statement when they are deemed ineffective or upon realisation of the cash flow.
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AMP Bank Limited
Statement of cash flows
for the year ended 31 December 2014

` Consolidated Company
Dec 2014 Dec 2013 Dec 2014 Dec 2013
Note $m $m $m $m
Cash flows from (used in) operating activities
Interest received 792 782 783 775
Interest paid (606) (660) (611) (654)
Fees and commissions received 11 11 18 17
Cash payments in the course of operations (64) (56) (57) (55)
Income tax paid (44) (43) (44) (43)
Cash flows from operating activities before changes in
operating assets and liabilities
89 34 89 40
Changes in operating assets and liabilities:
Net funds advanced to customers for loans and advances (1,167) (940) (1,167) (940)
Net funds advanced to banks 293 229 293 229
Net acceptance from deposits and other borrowings 102 915 102 915
Decrease in interest receivables for derivatives 1 1 1 -
Increase in interest payables for derivatives - - 1 -
Net increase (decrease) in loans due to controlled entities
- - 378 84
Net decrease (increase) in other assets (2) - (2) -
Net increase (decrease) in other liabilities
1 (2) (50) 27
Net cash (used in)/provided by operating activities 20(b) (683) 237 (355) 355
Cash flows from investing activities
Purchase of debt securities (4,191) (5,511) (4,191) (5,511)
Proceeds from maturity of debt securities 4,654 4,550 4,654 4,550
Net cash provided by/(used in) by investing activities 463 (961) 463 (961)
Cash flows from financing activities
Repayment of issue of subodinated debt - (100) - (100)
Proceeds from issue of debt securities on issue 2,500 2,151 500 1,050
Repayment of debt securities on issue (2,224) (1,234) (556) (250)
Dividends paid (20) - (20) -
Net cash provided by/(used in) by financing activities 256 817 (76) 700
Net increase (decrease) in cash and cash equivalents
36 93 32 94
Cash and cash equivalents at the beginning of the year
388 295 323 229
Cash and cash equivalents at the end of the year 20(a) 424 388 355 323

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