AMP (ASX: AMP) has given an update about its 2020 half year operating earnings. It includes the impacts of COVID-19. The AMP share price is down 8%.
AMP is one of Australia’s largest diversified financial businesses, though it has severely shrunk since the Hayne Royal Commission
.
AMP’s HY20 update
AMP said that it expects to report continuing business earnings of approximately $195 million. The reason why AMP has made that ‘continuing’ distinction is that it recently sold a division for $3 billion
.
The Australian wealth management division expects operating earnings of $60 million with average assets under management (AUM) of $126 billion, down 6% compared to the second half of 2019. Net outflows were around $4.4 billion.
AMP Capital expects operating earnings of $70 million with average AUM of $198 billion, down 2% compared to the second half of 2019. Performance and transaction fees are estimated to reduce by around 40% compared to the prior corresponding period due to market impacts.
AMP Bank expects operating earnings approximately $50 million. A credit loss provision of $25 million is expected, which will impact earnings. Increased COVID-19 provisions are common with banks at the moment. The total loan book is expected to be $20.9 billion, an increase of around 3.5%.
Cost savings
AMP said it’s still committed to delivering $300 million of annual cost savings. It’s investing between $1 billion to $1.3 billion to transform the business.
Summary
AMP is making operating profit in each of its divisions, which is a good sign. A business shouldn’t go to $0 if it’s making genuine profit in its operating divisions. But I just don’t know what the future holds for AMP – will it just keep losing clients? I’d rather go for other ASX dividend shares with clearer paths to growth.
[ls_content_block id=”14948″ para=”paragraphs”]
