Losses mount at AMP's NZ banking interests

By Richard Braddell

WELLINGTON - After a $2.5 million profit in 1997, AMP's New Zealand banking interests have run into losses as they invest in new products and technology ahead of a complete merger later this year.

AMP/Ergo Mortgage and Savings, the financial entity backing Ergo Personal Financial Services, reported a calendar 1998 loss of $3.3 million, reversing a $2.5 million profit the previous year.

The loss came after operating costs more than doubled to $23.7 million due to systems and other integration-related development work.

The banking operations are currently split between Ergo and the New Zealand branch of AMP Bank, which was registered as a bank last October on the back of the $450 million Citibank mortgage portfolio acquired the month before.

After growing its mortgage book to $500 million in the latest March quarter, AMP Bank has also reported a loss for the quarter of $598,000.

Ergo, with $584 million in securitised loans in December and a direct loan book of $805 million, is the largest part of banking operations.

But it is to be folded into AMP Banking which, ironically, is now operating on a technology platform brought over from Australia which was originally developed by Ergo in New Zealand, but which has been expanded and refined to cater for a wider range of services.

Ergo's deputy managing director, Philip McIntyre, said the combined New Zealand operations currently have total lending of $2.1 billion after passing through the $2 billion mark in March.

"The intention is to have everything in the bank by the end of the year, and to have the core set of banking products to market," he said.

AMP Bank, which until a few weeks ago was operating on Citibank systems, is offering cheque and debit card facilities.

By the end of the year, an all-in-one cash management account with existing term lending and credit lines secured against a home mortgage will be offered.