AMP’s Discretionary Distribution Raises Questions on Future Payment Certainty

AMP’s Latest Distribution Announcement

AMP Limited has confirmed a quarterly distribution payment of AUD 1.8508 per security on its AMP Capital Notes 2 (ASX, AMPPB), scheduled for 16 December 2025. This announcement follows the usual timetable with an ex-date set for 5 December and a record date of 8 December, allowing investors to plan accordingly.

Distribution Details and Yield Composition

The distribution is partly franked at 20%, meaning a portion of the payment carries a tax credit reflecting corporate tax already paid by AMP. The franked amount per security is AUD 0.3702, while the remaining 80% is unfranked. This mix is typical for hybrid securities, balancing tax efficiency with investor returns.

Importantly, the total annualised distribution rate for this period is calculated at 7.4237%, derived from the 3-month bank bill swap rate plus a margin of 4.5%, adjusted for franking. This rate reflects prevailing market conditions and AMP’s capital structure strategy, offering investors a competitive yield in the current environment.

Regulatory and Payment Conditions

AMP has confirmed that no external approvals, such as security holder, court, or regulatory consents, are required before the distribution payment date. However, the payment remains at AMP’s absolute discretion and is subject to standard conditions outlined in the AMP Capital Notes 2 prospectus, including the absence of any payment restrictions on the date of distribution.

This discretionary nature is common for hybrid capital instruments, which blend features of debt and equity, and means investors should remain attentive to AMP’s ongoing financial health and regulatory environment.

Investor Implications and Market Context

For investors, this distribution announcement reinforces AMP’s commitment to maintaining steady income streams from its hybrid securities. The partly franked nature of the distribution may appeal to investors seeking tax-effective income, while the yield remains attractive relative to comparable fixed income products.

Looking ahead, market participants will watch for any shifts in AMP’s credit profile or regulatory landscape that could influence future distributions. The announced rate and payment schedule provide a clear near-term outlook, but the discretionary clause underscores the importance of monitoring AMP’s broader financial performance.