The AMP Ltd (ASX: AMP) share price sank around 15% after releasing its FY24 result.
AMP is a diversified financial business which was best known for its retirement, investment and advice services. It also has banking operations.
FY24 result
The company just reported its annual result for the 12 months to December 2024. Here are the highlights from the report:
- Controllable costs down 6.1% to $648 million
- Platforms underlying net profit after tax (NPAT) rose 18.9% to $107 million
- Superannuation and investments underlying NPAT up 26.4% to $67 million
- AMP Bank underlying NPAT reduced 22.6% to $72 million
- New Zealand wealth management underlying NPAT up 8.8% to $37 million
- Total underlying NPAT up 15.1% to $236 million
- Statutory NPAT of $150 million (down 43%)
- Final dividend of $0.01 per share
- Full-year dividend of $0.03 per share
AMP said its platforms business result was driven by “strong market conditions, positive net cashflow momentum and cost discipline”.
The superannuation and investments segment saw controllable costs reduce by $4 million to $170 million and variable costs declined 9.2%, due to lower investment management expenses as a result of simplification activity.
AMP Bank’s weaker result reflected subdued volume growth as it prioritised profit margins. Despite that, the net interest margin (NIM) – a profit measure showing the net result of loan rates versus things like savings accounts rates – worsened to 1.26%, down from 1.42% in FY23. NIM compression slowed in the second half of FY24. The residential mortgage book returned to growth in the second half of FY24. Credit quality “remained strong”.
New Zealand wealth management benefited from a rise of asset under management (AUM) related revenue increasing $3 million to $91 million, while non-AUM revenue diversification continued.
Profit growth is normally a key driver of the AMP share price, so today’s result didn’t impress.
Management comments
AMP Chief Executive Alexis George said:
2024 was another year of strategic delivery for AMP as we build positive performance momentum and focus firmly on growth.
We sold and transitioned the Advice business, hit cost targets and completed our $1.1 billion capital return program. Our wealth businesses are competing strongly in their chosen markets, driving positive performance, and we’re launching new offers including digital advice.
In our North platform there has been continued adviser take up of our innovative retirement products and managed portfolios, which is driving inflows. In Superannuation & Investments, our strong member proposition, including top-quartile investment returns for the year, are supporting the continued improvement in cashflows.
We saw improving trends in AMP Bank in the second half of the year, including a return to growth in the mortgage book as previously indicated. We continue to prioritise margins in a competitive environment, and this month’s launch of our new digital bank is an important way to start to address the funding and revenue mix.
We were disciplined in driving efficiencies through the businesses and remain committed to delivering our cost commitments for FY 25. The completion of the $1.1 billion capital return program was an important milestone, and the Board has today declared a final dividend of 1.0 cent per share, 20% franked taking the full year dividend to 3 cents per share.
Having successfully completed the Advice transaction in December 2024, AMP is positioned to drive growth and build on opportunities in our wealth businesses to become a pre-eminent retirement specialist, and as a leading digital bank.
Final thoughts on the AMP share price
The company gave some guidance commentary related to FY25.
Platforms AUM based revenue margin is expected to be about 43 basis points (0.43%).
Superannuation and investments FY25 AUM based revenue margins is forecast to be approximately 63 basis points (0.63%).
The AMP Bank NIM is expected to be broadly in line with FY24.
FY25 controllable costs are expected to be around $600 million, mainly driven by group cost reduction. The business simplification program continues, with the $150 million program investment remains “on track”.
The market was clearly expecting more. It’s hard to say if the business is appealing at the lower price because it’s difficult to know what the future profit growth could be.
For me, there are other ASX growth shares I’d rather buy.
