The AMP Ltd (ASX: AMP) share price is up 11% after the ASX financial share reported its HY24 result and revealed a partnership for AMP Advice.
AMP is a diversified financial business which is involved in financial advice, asset management and banking.
HY24 result
AMP has reported how its business has performed in the first six months of 2024:
- Underlying net profit after tax (NPAT) rose 5.4% to $118 million
- Statutory NPAT sank $158 million to $103 million – last year included the net gain of $209 million from AMP Capital and SuperConcepts sales
- Controllable costs decreased 6.4% to $339 million
- Interim dividend per share declared of $0.02
- $150 million of on-market share buyback completed in HY24 result
Looking at the individual divisions, AMP Bank saw underlying NPAT decline 39% to $35 million, reflecting a challenged and smaller net interest margin (NIM). NIM tells us how much profit banks make on their lending, comparing the costs (eg savings accounts) compared to the revenue (eg loan rate to borrowers).
AMP said its bank’s credit quality “remains strong”, meaning borrowers are still in good shape, despite the high interest rates.
The ASX share’s platforms underlying NPAT grew 22.7% to $54 million with “improved net cashflows and disciplined cost management”. Independent financial adviser flows are now 35% of inflows and were up 30%.
The AMP superannuation and investment divisions, previously called Master Trust, saw underlying NPAT increase by 21% to $34 million.
AMP’s advice segment saw the underlying net loss improve 40% year on year to $15 million. A “transformational partnership” for this division was announced today (see below).
The New Zealand underlying NPAT was stable at $17 million.
Advice partnership
AMP also announced separately that it has entered into a partnership with Entireti and AZ NGA.
Entireti will acquire AMP’s advice licensees and Jigsaw for $10.2 million, with AMP to retain a 30% stake.
AZ NGA will acquire AMP’s minority stake in 16 advice practices for $82.2 million.
This transaction “expedites AMP’s drive to a sustainable advice proposition, after a thorough 12-month process to assess alternative models.”
The partnership “creates a large-scale services and licensee business for advisers and can provide future investment in modern requirements for advice practices.”
The anticipated accounting loss on the sale of its AMP Advice business of around $30 million in the second half of FY24 due to separation and transition costs.
Final thoughts on the AMP share price
AMP has announced a reduction of its exposure to financial advice, while also delivering underlying profit growth for solid overall growth of the business.
I’m not going to call it a buy, I don’t know how sustainable its profit growth is. But, if I were a shareholder I’d be happy to see increased earnings, a dividend payment and a reduction of exposure to the division that has caused so much trouble over the years.
