AMP Bank leans on wholesale funding as deposit flow slows

AMP Bank has had to rely on a big increase in its wholesale funding program to support growth in its mortgage book during the June half, as deposits declined.

The bank's retail deposits were A$5.1 billion at the end of June - an increase of 9.1 per cent compared with June last year. But deposits sourced through superannuation accounts fell by 12.4 per cent to $3.7 billion.

Total customer deposits fell one per cent year-on-year to $8.8 billion. The ratio of customer deposits to loans fell from 64 per cent to 58 per cent.

The mortgage book grew 8.2 per cent year-on-year to $14.6 billion.

Growth in the loan book was funded by an increase in wholesale funding, which grew 31 per cent from $2.9 billion in June last year to $3.8 billion in the latest half.

AMP Bank contributed operating earnings of $50 million to AMP Ltd's bottom line for the six months to June - up 19 per cent on the previous corresponding period.

Net interest income was up 16 per cent to $129 million and margin was up 18 basis points to 1.53 per cent. The bank said enhanced liquidity management and lower wholesale funding costs contributed to the higher margin.

The bank's cost-to-income ratio fell a little from 30.6 per cent in June last year to 30 per cent in the latest half.

The loan arrears rate was steady at 0.44 per cent and loan impairment expense as a proportion of gross loans and advances came down from 0.02 per cent in June last year to 0.01 per cent in the latest half.

Sixty-eight per cent of mortgages in the portfolio were owner-occupier loans and 32 per cent investor loans.