Losses fail to weaken AMP faith

By KEVIN TAYLOR

AMP Bank's string of losses in New Zealand continued in the December quarter, but the bank is confident of an improved result this year as it clears a year of restructuring.

The New Zealand branch made a $23 million loss last year, compared to a $22.5 million loss in 2000, reports the latest disclosure statement it must file with the Reserve Bank and make public.

But the state of its New Zealand operation is not as bad as it looks, the bank says.

Of the loss last year, about $17 million was for one-off restructuring costs from the shift of some operations back to Sydney and the loss of about 150 of the direct banker's 200 New Zealand-based jobs.

The bank's Australia and New Zealand head of retail banking, Michael Guggenheimer, said yesterday that the New Zealand branch had to be looked at with the two Ergo operations as well - Ergo Mortgage and Savings and Ergo Personal Financial Services.

Since neither is a bank, their contribution to AMP Banking's New Zealand operations are not revealed in the disclosure statements.

Guggenheimer said that if the profit from the Ergo companies was included and restructuring costs subtracted, AMP Bank's overall New Zealand operation started to look healthier, with a $4 million net loss last year.

He said that if Ergo's operations were factored into the 2000 result as well, the loss was $17 million, meaning last year was a big improvement on the year before.

AMP Bank looked on all its New Zealand operations - the bank and the two Ergo companies - as one for management accounting purposes.

Guggenheimer said last year's result was in line with the bank's expectations and it was "more than happy with the way things are going".

Putting the losses to one side, the bank had had good asset growth and strong growth in deposits. Revenue had grown 40 per cent on 2000. It had also focused on expenses and unnecessary duplication.

"We are very pleased with where we are at this point in time."

Guggenheimer said this year would be a strong year for the bank.

The loss in the New Zealand operation compares to an overall result for AMP Bank in Australia and New Zealand of A$5 million ($6 million) profit last year. In 2000 the combined operation lost A$17 million ($20 million).

Guggenheimer said the better result was coming out of Australia, which was a more mature operation.

"We are still growing and developing our business in New Zealand. It's probably a little bit more advanced in Australia just simply because we are a little bit more diversified."

David Tripe, director of Massey University's Banking Studies Centre, said if he was an AMP shareholder he would not be impressed with bank's performance.

"One wonders in view of the way they are running their business in this country whether they are intent on running a viable business."

He said AMP Bank was the only major bank in the country consistently losing money. He wondered whether the restructuring costs would continue to drip-feed through into the quarterly results of the bank's New Zealand operation.