IOOF (ASX:IFL) share price on watch following Q4 update

IOOF has just handed in its fourth quarter update…

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The IOOF Holdings Limited (ASX: IFL) share price could be one to watch on Thursday.

This follows the release of the financial services company's fourth quarter update.

Young professional person providing advise to older couple.

Image Source: Getty Images

How did IOOF perform?

For the three months ended 30 June, IOOF revealed a $9.4 billion increase in its Funds Under Management, Advice and Administration (FUMA) to $213.3 billion.

This was driven partly by positive market movements of $5.3 billion, which helped offset $1.8 billion of net outflows from its Financial Advice business. Management advised that this outflow was driven largely by the exit of 33 advisers from its self-employed advice business as part of its transformation program.

Also growing was its MLC Assets Under Management and Funds Under Administration (AUM/FUA), which increased $11.4 billion to $301.2 billion. MLC was acquired from National Australia Bank Ltd (ASX: NAB) at the end of May.

Management commentary

IOOF's CEO, Renato Mota, was pleased with the quarter and particularly the performance of its Portfolio & Estate Administration business.

He said: "Ongoing positive organic flows into Portfolio & Estate Administration were experienced, achieving quarter-on-quarter positive flows for the last 34 quarters, as well as a positive turnaround in flows into Investment Management during the quarter."

"The successful completion of the MLC acquisition has transformed our business in terms of size, scale and reach. The 'new IOOF' has over $200 billion of funds under administration across its platforms, in excess of $200 billion of investment funds across its multi-manager and direct investment portfolios, and relationships with more than 9,000 financial advisers, supporting more than two million Australians with their retirement and investment decisions."

"This gives us a strong platform for future growth, including the enhanced ability to attract new FUMA though our extended scale and reach," he added.

$200 million non-cash impairment

Something that could weigh on the IOOF share price today was news that it will be making a one-off non-cash impairment charge of $200 million.

This one-off non-cash impairment relates to goodwill associated with Shadforth Financial Group, DKN Financial Group, and Bridges Financial Services Group. It primarily reflects the termination of the platform relationship with BT Portfolio Services and the cessation of grandfathered revenue in the advice business.

Importantly, the impairment is a non-cash accounting adjustment and will not impact IOOF's underlying net profit after tax nor the determination of its final dividend.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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