AMP (ASX:AMP) share price on watch as net profit jumps 57%

Why the ASX financials share is one to watch today.

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The AMP Limited (ASX: AMP) share price is one to watch this morning after the Aussie financial group’s half-yearly results release.

AMP share price in focus as profit lifts

AMP provided its operational and financial update for the half-year ended 30 June 2020 (1H21). Investors will be keeping an eye on the AMP share price today after the company reported the following highlights:

  • Net profit after tax up 57% on the prior corresponding period (pcp) to $181 million.
  • Australian wealth management assets under management (AUM) up 8% to $121.0 billion.
  • Australian wealth management net cash outflows of $2.7 billion, compared to net cash outflows of $4.0 billion in 1H20.
  • Controllable costs (ex AMP Capital) down 6% to $387 million.
  • Surplus capital of $452 million above target requirements.
  • Underlying group return on equity up to 8.3% (6.0% in 1H20).

The AMP share price is also one to watch this morning after the board declined to pay an interim 2021 dividend.

What did management say?

The AMP share price has been under pressure in 2021 and investors will be watching today’s results carefully. Newly appointed AMP CEO Alexis George, however, was positive about the performance and turnaround efforts.

Our business has had a stronger first half financially, we have demonstrated our commitment to deliver our strategic priorities of reshaping and simplifying the business and focusing AMP Capital on private markets.

We are starting to see some positive signs of growth and innovation, particularly in our bank and platforms businesses where we are introducing new services that our clients want.

Getting our demerger done will be a core priority. We’ve set out a clear timeline to establish and separate the AMP Capital Private Markets business this year, and complete the demerger in 1H 22.

What’s the outlook for FY21?

The AMP share price will be in the spotlight on Thursday following the financial giant’s half-yearly update. AMP did also provide some full-year guidance to the market this morning.

The financial group is forecasting controllable costs of $775 million, in line with previous guidance figures. AMP is expecting the Global Equities and Fixed Income (GEFI) and Private Markets businesses to internally separate in FY21.

Loan growth momentum for AMP Bank is expected to continue in the second half of the year while AMP Capital FY21 earnings are forecast to decline versus FY20 due to lower performance and investment returns.

How has the AMP share price performed recently?

The AMP share price climbed 1.4% higher on Wednesday ahead of today’s results release. However, shares in the Aussie financial group are down 30.8% in 2021 and are trading near an all-time low.

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Motley Fool contributor Ken Hall 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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