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AMP Ltd - HY21 result - no surprises with poor long-term outlook

Timothy Anderson

Timothy Anderson is a contributor with the Australian Stock Report and is currently in his final year of studying a Bachelor of Applied Economics and a Bachelor of International Relations and Politics at the University of Canberra. Tim has a genuine passion for economics, specifically in macroeconomic analysis including how certain macroeconomic policies and indicators affect financial markets and the economy, as well as how these factors affect personal investment strategies. Tim currently holds RG146 Tier 1 Generic Knowledge qualifications.

AMP Ltd (ASX: AMP) is a financial services company in Australia and New Zealand. AMP specialises in providing personal and business financial services that include superannuation and investment products, insurance, financial advice and a range of banking products such as home loans and savings accounts. Its market capitalisation is $A3.54 billion.




What are the key features of AMP’s HY20 result?

AMP’s underlying NPAT for HY21 of A$181m was 57.4% higher on FY20 due to higher investment income, strong cost performance and increase earnings in AMP bank. This result is in line with market expectations. Regarding AMP’s individual operations, Australia wealth management NPAT decreased by 17.2%, AMP bank NPAT increased by 76%, AMP Capital NPAT decreased by 18.7%, New Zealand Wealth Management NPAT increased by 11.1% and Group Office NPAT increased by 58.1%.

The most positive performance from AMP operations is AMP Bank, which improved its result from the previous half-year due to an improved macro-economic outlook and a more stable funding environment. Residential mortgage books grew 4.3% annualised while total deposits were broadly stable. Net Interest Margins (NIM) increased by 8 basis points, which was driven by lower funding and deposit rates.

AMP management indicated that there will be no dividend declared this half-year. AMP investors are not to receive a dividend until the completion of the demerger of AMP Capital businesses of infrastructure equity, infrastructure debt and real estate in HY22.


What is the outlook for AMP?


AMP’s management did not provide any specific guidance on earnings for the next half-year or full year. However, the long-term outlook for AMP remains negative. AMP has not been able to fully recover since the findings from the Hayne Royal Commission and the public perception of the company.


What is the market reaction?

The market reaction to AMP’s HY21 profit result is positive with the share price increasing by 2.3% to A$1.10. This is following a steady decline in the share price since 2000 from around A$13.00. AMP is trading at a forward P/E ratio in the high-teens and is not paying any dividends.


This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purposes only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceedings. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.

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