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AMP defends $46m bank loss

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    AMP defends $46m bank loss
    May 15
    George Lekakis

    AMP Ltd yesterday defended the performance of the group's banking operations after accounts filed to the Australian Securities and Investments Commission showed that AMP Bank Ltd recorded a net loss of $46.6 million in the 12 months to the end of December last year.

    The disappointing result brings the accumulated losses of AMP Bank to more than $157.5 million since it was launched in 1998.

    The 2001 loss - revealed in the statutory accounts of AMP Bank - was surprising in light of disclosures in AMP's group annual report in which the parent said it posted a net profit of $5 million on its Australasian banking operations.

    "AMP's international banking business gathered momentum in 2001, moving into profitability in Australia and New Zealand, and meeting its targets in the UK, where it was launched in June 2000," the parent company told shareholders.

    According to the statutory accounts, AMP Bank generated operating income of $106.69 million against total expenses of $171.9 million 2001. The bank booked a tax benefit of $18.5 million on its ordinary business, bringing the net loss for the year to $46.6 million.

    According to disclosures made to the Reserve Bank of New Zealand, the AMP Bank loss included a negative return in New Zealand, where it racked up net losses of $NZ23.02 million (about $18 million).

    The bank also reported an $18 million loss on its UK banking platform, launched in June 2000.

    The head of AMP Bank in 2001, Craig Dunn, said the statutory accounts did not mirror the actual operating performance of all of the group's banking activities.

    He said for legal and regulatory reasons the group's profitable GIO banking subsidiaries and a New Zealand mortgage business had to be excluded from the accounts of AMP Bank Ltd.

    GIO Building Society, which is in the process of being integrated into the AMP Bank entity, reported a slight drop in net earnings to $3.1 million, from $3.2 million in 2000.

    The migration of the GIO business later this year will provide some relief to AMP Bank's balance sheet, which is carrying accumulated losses of $157.5 million.

    The GIO BS balance sheet shows that the society has accumulated profits of more than $11.5 million.

    Mr Dunn indicated that one-off project costs that were represented in the AMP Bank statutory accounts were excluded from the reported $5 million Australasian banking profit shown in the AMP group annual report.

    The one-off costs related to the GIO integration and the relocation of some New Zealand banking platforms to Australia.

    "There were certain project costs incurred by the bank but held at the AMP Group corporate level which related primarily to the integration program with GIO Building Society," he said.

    "There were also one-off integration costs involving the New Zealand operations where parts of the New Zealand business were relocated to Australia."

    While AMP Bank and ING Direct are among the fastest-growing deposit-takers in the local retail banking market, both are struggling to be profitable.

    ING Bank (Australia) Ltd is yet to lodge its accounts for last year with regulators, but posted a $17.1 million loss in the 12 months to the end of December 2000 mainly due to higher promotional costs for its online deposits business.
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