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Macro Australian Economy

Shares for AMP [ASX:AMP] Sink 14% on NPAT Loss

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By Mahlia Stewart, Thursday, 16 February 2023

Underlying profit for AMP falls short for 2022. Despite receiving a dividend, investors were downvoting AMP’s share price by 14%.

Financial services platform AMP [ASX:AMP] saw its shares topple 14% to $1.13 after announcing underlying net profit after tax (NPAT) had fallen from $280 million in 2021 to $184 million in the last full-year report.

It appeared the company’s promise of a final dividend at 2.5 cents a share (20% franked) was not enough to placate investors today. Nor was the report of $387 million in statutory net profit after tax (which had improved on the $252 million loss taken the prior year).

AMP’s stock has not had a good start to the year, having dropped 16% in the last month and by more than 17% in the past week alone.

Over the longer term, though, AMP has shown more resilience, having gained more than 11% over the past 52-week cycle.

AMP stock chart

Source: tradingview.com

AMP’s 2022 highlights fail to delight

The company reported underlying net profit after tax (NPAT) of $184 million, significantly less than the $280 million in 2021.

Assets under management were flagged under investment losses from clients in the year. This, combined with ever-present market volatility, caused AMP to lose $5.3 billion in net cash.

The group’s core wealth management business continues to struggle after copping a blow from the Hayne royal commission back in 2019 when it was exposed for questionable policies charging customers for services it had no intention to provide, along with false statements made to regulators regarding its operations back in 2019.

Even so, the company still decided to give a final dividend to its shareholders of 2.5 cents a share at a 20% fully-franked rate.

Statutory NPAT came to $387 million in the year, which was an improvement on the prior year’s $252 million statutory loss, thanks to gains made in the sale of its infrastructure debt platform.

AMP’s bank residential mortgage book grew $2 billion, improving the net interest margin in the second half of the year and lending some credit strength to its loan book amid cash rate increases.

Alexis George, AMP’s CEO, stated:

‘Our profit for the year reflects the challenging economic environment we are facing, as well as strategic decisions to reprice our offers in Master Trust and Platforms to deliver both highly competitive and attractive offers.

‘We are seeing positive momentum around the transformation of our Advice business, where we have more than halved the losses, and our key growth businesses — AMP Bank and Platforms — are starting to benefit from the investments we are making in those businesses.’

The group continues to progress its capital management program of $1.1 billion, including $267 million of its targeted $350 million on-market share buyback completed at the end of the year.

Discontinued operations related to AMP Capital alleviated the company’s cost base by $54 million, and the group says it will remain focused on disciplined cost management across its sectors.

ASX Australian commodities

It can be a competitive place, the commodities market, especially when more multi-divisional businesses begin tapping into the energy generation industry.

Our in-house resources expert and trained geologist, James Cooper, thinks the Australian resources sector is set to enter a new commodities boom, which will be brought on by something called the ‘Age of Scarcity’ as more companies rush to the mines.

This has James convinced ‘the gears are in motion for another multi-year boom in commodities’ and Australia and its stocks stand to benefit greatly.

The next big mining boom is predicted to happen in the next few years. The question is, are you ready for it?

Don’t let the same people who got rich last time be the only ones for a second time!

You can access a recent report by James on exactly that topic, AND access an exclusive video on his personalised ‘attack plan’ — right here.

 

Regards,

Mahlia Stewart,

For The Daily Reckoning

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Mahlia Stewart

Mahlia’s Premium Subscriptions

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

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