AMP (ASX:AMP) share price on watch after Q1 update

The AMP Ltd (ASX:AMP) share price will be one to watch on Thursday following the release of its first quarter update this morning…

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The AMP Ltd (ASX: AMP) share price will be one to watch this morning.

This follows the release of the financial services company’s first quarter update.

What did AMP report?

According to the release, for the three months ended 31 March, AMP recorded a $1.6 billion increase in Australian wealth management (AWM) assets under management (AUM) to $125.7 billion.

This was driven by improved investment markets, which offset AWM net cash outflows of $1.5 billion. Though, it is worth noting that $448 million of these outflows relate to regular pension payments to clients.

The AMP Bank business recorded a $0.2 billion increase in its total loan book to $20.8 billion. This was driven by growth in owner-occupied loans.

Things weren’t quite as positive for its AMP Capital business. AMP Capital’s AUM fell 1.7% to $186.5 billion during the quarter. This reflects net cash outflows from public markets, the sale of the Global Companies capability, and its share of listed NZ REIT Precinct Properties New Zealand Limited.

AMP Capital also recorded external net cash outflows of $1.3 billion during the quarter. This was driven primarily by fixed income outflows, as well as planned divestments of assets in infrastructure equity closed-end funds. Management notes that the divestments, reflected in cash outflows, delivered strong performance outcomes for clients.

Management commentary

AMP’s Chief Executive, Francesco De Ferrari, was pleased with the quarter.

He said: “Business performance remained resilient during the first quarter as we continued to make progress on delivery of our transformation strategy to become a simpler, client-led business.”

“In Australian wealth management our cashflows are showing underlying signs of improvement, with a reduction in outflows from corporate super mandates and a reduced impact from Protecting Your Super legislation. The increase to our assets under management in our wealth management business reflects continued improvement in investment markets in Q1. We supported clients through the period with A$448 million in pension payments, which are reflected in cash outflows.”

Looking ahead, Mr De Ferrari appears optimistic on the future.

He commented: “We are accelerating change within AMP, having made strong progress on addressing our legacy issues, including our client remediation program, which is close to 90 per cent complete. We remain focused on delivering critical priorities to progress our transformation over the next quarter and continue positioning the business for future growth.”

Where next for the AMP share price?

The AMP share price is down a disappointing 25% this year. Whether this update will be enough to get it heading higher again, time will tell.

One broker that isn’t overly positive is Ord Minnett. On Wednesday, the broker put a hold rating and $1.35 price target on its shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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