AMP Limited (AMP)
BUY

Net-flow Beat

 19 Apr 2023
Sector: Financials

1Q23 UPDATE

Need To Know

  • AWM and NZ AUM net-flows ahead of market estimates.
  • Slight miss on Bank loan book growth. 
  • A$325m buyback expected to resume today. 

AMP came out with its 1Q23 AUM and cashflow update reporting decent beats to market expectations on net-flows and AUM. 

AUSTRALIAN WEALTH MANAGEMENT (AWM)

  1. Closing FUA A$126bn vs estimate of A$121bn. 
  2. We note that the market was expecting the lost Woolworths super mandate to be split between Q1 and Q2, but It looks like all $4bn will go through in Q2. 

AMP BANK

  1. Closing loan book of A$24.2bn vs estimate of A$24.1bn. 
  2. Loan book growth of A$152m vs estimate of A$250m. 
  3. Loan growth ramped up toward the end of the quarter. 
  4. NIM largely in-line with FY22.

NEW ZEALAND WEALTH MANAGEMENT (NZ)

  1. Closing AUM was A$10.6bn vs estimate of A$10.4bn
  2. Net-flows were -A$19m vs estimate -A$30m

Investment View

It’s nice to see AMP come out with a release that wasn’t so negatively skewed. It’s likely to be well received by the market. 

AMP was originally supposed to report the 1Q report tomorrow but brought it forward to today. Due to the lack of negative information out of the release, it won’t be seen as a bad thing and simply allows the buyback to resume a day earlier (which has been in blackout since Monday). 

AMP completed its tranche 1 capital return program (A$350m buyback) in March 2023 and on April 4th begun its tranche 2 program (A$325m buyback). AMP have been tracking ~20% of daily vols over the past 2 weeks. 

We believe shareholders will shift their focus towards the outcome of the cost & capital review which is expected to be released by the 1H23 Result at the latest. The market is clearly expecting significant actions on costs and are calling for the capital returns program to pick up the pace. 

AMP are ironing out some stubborn wrinkles and whilst turbulent, are making positive progression. At a 25% discount to NTA and an additional A$325m buyback rapidly underway (~8% completed in 10 trading days), we see upside to AMP at current levels. 

Figure 1: Price to NTA at ~25% discount. On market share buyback should help close the gap.

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Company Overview

AMP Limited is a wealth management company. It offers advice on retirement, wealth management, mortgages, technology investment, real estate, equities, and funds.

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