AMP Bank has gone against the trend, missing the opportunity provided by higher interest rates to improve margins in 2022, instead suffering a 24 basis point fall in its net interest margin. AMP released its full-year financial report for 2022 yesterday, showing that while the bank is still the highest profit earning business in the group, its performance was well down last year. The bank reported a 31 per cent increase in interest income to $84 million but an 82 per cent increase in interest expense. As a result, net interest income fell 4 per cent to $382 million. Variable costs rose 31 per cent, impairments went from a benefit in 2021 to a charge of $3 million last year and brokerage and commission costs were up 13 per cent. The cost-to-income ratio rose from 39.4 per cent in 2021 to 47.4 per cent last year. The bank’s net profit fell from $153 million in 2021 to $103 million last year. NIM fell from 1.62 per cent in 2021 to 1.38 per cent last year. It improved in the second half – up from 1.32 per cent in the June half to 1.44 per cent in the second half. “Intense competition and a higher proportion of fixed loans in the first half continued to place downward pressure on revenue margins,” the bank said. It said it would look at ways to optimise deposit and funding costs. “AMP Bank will pursue growth above system and strengthen NIM within our return on capital hurdle.” The residential mortgage book rose 9 per cent to $23.7 million, compared with system growth of 6.5 per cent over the year. Total deposits rose 17.7 per cent to $20.9 billion, giving the bank a deposit-to-loan ratio of 87 per cent. Deposit growth was three times system growth and there was a big shift to term deposits. AMP Bank was a rate leader in the TD market for much of last year. Credit quality was good, with 90-day arrears falling from 50 basis points in 2021 to 30 bps last year.