The AMP Ltd (ASX: AMP) share price is moving higher today after announcing a 53% increase in its underlying profit for FY21.
Keep up to date with the February 2022 reporting season calendar.
Currently, the AMP share price is up 4.65% to $1.06.
AMP FY21 result
Key highlights for the year ending 31 December 2021 include:
- Revenue of $1.52 billion, down 4.2% year-on-year (YoY)
- Underlying net profit after tax (NPAT) of $356 million, up 52.8% YoY
- Statutory NPAT loss of $252 million
- Cost savings of $100 million delivered in FY21
- No final dividend
Despite the fall in revenue, AMP managed to achieve a big uplift in underlying profit.
The company simplified its organisational structure, reduced its property footprint and improved technology.
Additionally, AMP benefitted from $44 million in investment income that drops directly to the bottom line.
Across its four divisions, AMP Bank and AMP Capital were the standout performers, increasing profit by 37.8% and 64.8% respectively.
The Banking segment achieved 1.36x system growth leading to a 7.7% jump in the residential mortgage book.
AMP Capital benefitted from strong fund performance leading to increased performance fees.
New Zealand wealth management also performed admirably with profit up 11% despite losing its title as the KiwiSaver (akin to Australia’s superannuation system) default provider.
Australian wealth management profit fell 25% as a result of asset impairments and the removal of grandfathered commission structures.
Dividend scrapped as one-off costs pile up
Notwithstanding the profit jump, the underlying profit result doesn’t include $296 million in costs relating to client remediation, cost savings and the demerger.
Adding in a non-cash $312 million impairment, AMP recorded a statutory NPAT loss of $252 million.
Subsequently, the business elected to retain all earnings and not pay a dividend.
Demerger update
AMP plans to split the business in two are well progressed with the operational separation complete.
AMP Capital – to be renamed Collimate – will become a standalone public company, housing AMP’s capital-light infrastructure funds.
Management noted that it had received interest from suitors in purchasing the AMP Capital. However, this is “not unusual” at this stage of the process.
AMP will retain the banking and wealth management divisions. It will also undertake an 8-1 share consolidation.
The company will complete the sale of several business units over the second quarter.
It will also formalise the demerger process and publish a scheme booklet to shareholders.
What’s next for the AMP share price?
Without providing specific financial guidance, AMP made several comments regarding the outlook for FY22:
- Australian wealth management revenue margin of 55 basis points
- New Zealand wealth management underlying NPAT is expected to be flat
- AMP Bank targeting to double system growth through improved service, competitive pricing and channel expansion
- $40 million in additional cost savings
- Fee income reductions AMP Capital from the sale of assets and fee concussions
After years of shareholder destruction, the AMP share price is looking to be finally turning around.
With a positive outlook and a demerger on the horizon, FY22 could finally be its year.
