The AMP Ltd (ASX: AMP) share price has tumbled 4.5% lower this morning following a first-quarter cash flow update headlined by $1.8 billion of net outflows.
What were the key takeaways from AMP’s announcement?
AMP provided an update across its major operating divisions including the following:
Australian wealth management
- AMP’s Australian wealth management AUM increased 5% to A$129.3 billion in the quarter, with positive investment markets offsetting weaker cash inflows.
- Net cash outflows of A$1.8 billion compared to A$200 million in net cash outflows in Q1 18, which equates to a whopping 800% increase in year-on-year outflows.
- Cash inflows of A$4.69 billion, A$1.3 billion lower than Q1 18, which management said reflects reduced member contributions and slower inflows on its North platform.
- Cash outflows of A$6.46 billion, up from A$6.14 billion in Q1 18, included A$538 million in regular pension payments made to AMP’s clients.
- AMP Capital AUM increased 4% in the quarter to A$194.6 billion primarily due to stronger investment markets.
- During Q1 2019, AMP Capital confirmed the sale of its 50% shareholding in the management companies of Singapore-listed AIMS AMP Capital Industrial REIT (AA REIT) to joint venture partner AIMS Financial Group.
- As a result of this share sale, AMP Capital’s external AUM reduced by A$765 million and AMP Capital will recognise a gain on sale in 2019.
- AMP’s total loan book grew by A$127 million to A$20.1 billion during Q1 19, supported by continued growth from the mortgage broker channel.
- The deposit book increased by A$218 million in Q1 19 to A$13.5 billion relative to Q4 18. AMP’s strong growth in retail deposits has been partially offset by lower super and platform deposits.
New Zealand wealth management
- AMP’s NZ wealth management AUM increased by 7% to A$11.9 billion for the period driven primarily by positive market performance and net cash inflows of A$37 million into KiwiSaver.
- New Zealand wealth management experienced net cash outflows of A$52 million compared to A$53 million in net cash inflows in Q1 2018.
Should I buy AMP shares?
The AMP share price got hammered lower in 2019 alongside the major banks and fellow wealth manager IOOF Holdings Ltd (ASX: IFL).
However, all of these share prices have enjoyed a recovery amidst lighter than expected recommendations from the Financial Services Royal Commission and a general equities rebound in the first quarter.
While there’s an argument that the AMP share price could be bought on the cheap right now, this morning’s update suggests to me that there could be more pain in the short-term for AMP shareholders.
In the meantime, I’d suggest checking out top-rated stock in the booming $22 billion cannabis industry as a growth stock alternative.
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Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.