AMP Limited (ASX: AMP) shares fell nearly 5% this morning following the release of a quarterly cashflow update and the appointment of a new Chief Financial Officer (CFO).
AMP is a diversified financial services company with operations in financial planning and wealth management. A big part of its business is licensing other planning groups to provide advice. AMP also has capabilities in investing (AMP Capital), banking and insurance. Recently, AMP was a big focus for the banking Royal Commission.
Where’s The Cash Going?
The big figure from the quarterly cashflow report was the $1.8 billion net cash outflow from AMP’s Australian wealth management division for the quarter, compared to $200 million in net cash outflows in Q1 2018. The majority of this change came from a steep drop in cash inflows, down $1.3 billion to $4.69 billion. At the same time, cash outflows slightly increased.
New Zealand wealth management was similar to the Australian branch, with net cash outflows of $52 million compared to cash inflows of $53 million in Q1 2018.
AMP Capital saw a 4% increase in assets under management (AUM) for the quarter, which AMP said was primarily due to stronger investment markets.
AMP Bank seemed to have the strongest performance, with a total loan book growth of $127 million and deposit book growth of $218 million.
AMP Chief Executive Francesco De Ferrari said the focus during the quarter was accelerating change following the recommendations from the Royal Commission.
“Our focus during the first quarter has been on accelerating change within AMP including establishing a new leadership team, progressing the remediation program and separating our life insurance businesses, and sharpening our offers to new clients”, he said.
“Cashflows in Australian wealth management continue to be challenged given the post-Royal Commission environment. AMP Bank is performing well, with strong retail deposit growth and a modest increase in lending, and AMP Capital continued its strength in real assets.”
Speaking of New Leadership…
AMP also announced the appointment of John Patrick Moorhead as the new Chief Financial Officer, effective 1st June 2019.
Mr Moorhead is currently the CFO and COO of AMP Capital but will soon join AMP group’s leadership team. Mr Moorhead has previously held roles as the Group CFO of the Virgin Group in the UK and COO of Eight Roads, a proprietary investment arm of Fidelity International.
AMP Share Price Has Tanked
Investors didn’t see the increase in assets under management as something that could outweigh the heavy cash outflows, so the share price has fallen.
It remains to be seen how AMP can turn itself around post-Royal Commission, but I’m happy to watch it shares from a distance. AMP shareholders have had a tough 12 months with the share price down more than 40%.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.