AMP Half-Year Earnings Call Highlights

AMP (ASX: AMP) shares rallied 13% on Thursday after its first-half 2024 earnings smashed analyst expectations.

First-half 2024 Earnings Highlights

• Underlying net profit after tax up 5.4% to $118m vs. $105m consensus (12.4% beat)

• Statutory net profit after tax down 60% to $103m as the prior period reflected a net gain of $209m on the sale of AMP Capital and SuperConcepts

• Controllable costs down 6.4% to $339 million

• FY24 interim dividend of 2 cents per share, in-line with analyst expectations

• Full year guidance reaffirmed AMP Bank net interest margin between 1.10% and 1.15% and platforms revenue margins to be broadly in-line with 1H24

• Full year controllable costs expected to be $660m, down from previous guidance of $690m

Earnings Call Highlights

Financial performance: "Revenue was down 4% on March 2023. I think pretty well understood in terms of the NIM contraction that we're previously advised in terms of the bank. But that's offset by good volume and margin performance across our wealth businesses, obviously markets helping, but also cash flows." – CFO Blair Vernon

Cost management: "Costs we're delivering on our process in relation to costs down another nearly 6.5% and we're well on track to delivering the promised 6.90%, although that will be adjusted at the end of the year." – CEO Alexis George

AMP advice selldown: "We have been moving towards a breakeven space for AMP advice, but we've said publicly a number of times that that last $10 million to $15 million of losses was going to be hard to address given the nature of our business being a regulated entity and a listed entity." – CEO Alexis George

Market inflows: "On platform AMP our superannuation investments business that clearly benefited from the markets as they were in June, although a little more volatile in the last few days." – CEO Alexis George

Home loan competition: "As Alex mentioned, home loan volumes are slightly lower than we anticipate in the first half. That really reflects that intense competition we continue to see in the home loan market segments that we play in relative to the balancing of our focus on margin management is our most important." – CFO Blair Vernon

Dividends and buybacks: "EPS earnings are up today and as a result of this good result, we're able to announce a $0.02 per share dividend, 20% franked that together with the $963 million capital that we've retained for buyback, means that we will have delivered $.015 billion of the promised $1.1 billion capital return." – CEO Alexis George

Analyst Q&A Highlights

Citi analyst Nigel Pittaway asked management why they think growth will pick up in the second half of the year: "You can see in the first half was certainly been biased towards margin and that's why the volume has seen that reduction while the market remains competitive. There certainly are pockets that we're seeing we can growing at the right margin."

MST Financials analyst Lafitani Sotiriou asked about their capital return mix: "I think we want to get to the situation where we're in a more, I suppose, business as usual type capital management position, which is why we want to move to a more formal dividend policy. As you quite rightly note, we expect to finish that AUD 1.1 billion in the buyback by the end of the year. We'll come to the market with a formal dividend policy by the end of the year as well to move into that phase."

Macquarie's Benjamin Moss asked about the timing and priority of further pay downs in debt: "We obviously have debt maturity very late in life, which we paid down, which we flagged, broadly speaking, due to the debt we're carrying. We think that's a pretty neutral position now in terms of what our requirements are. So we don't necessarily see more pay down. There's nothing really due on the next period. In fact the next maturity is actually out like 2025 and so we're pretty comfortable with that."

This article was generated with the support of AI and reviewed by an editor.