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Key points
- AMP shares are the in spotlight as the company reports full year results on 10 February
- Earnings per share will be carefully watched
- AMP did not pay an interim dividend and may not pay a final dividend
AMP Ltd (ASX: AMP) shares are in the spotlight as investors await the diversified financial services company's 2021 full year financial results. Those are scheduled for release on Thursday 10 February.
Last year, AMP shares took an 11% tumble on the day the company released its 2020 results. That came on the back of a 33% year-on-year decline in underlying net profit after tax (NPAT).
So what will investors be looking for this year?
Earnings results will impact AMP shares
Investors will be keeping a close eye on earnings.
And earnings may well be down from last year, which could put pressure on AMP shares.
Macquarie has reduced its earnings per share (EPS) forecast for 2021 by 4.1% to 8.40 cents.
If AMP does see a fall in EPS, it will run contrary to the wider blue-chip market.
As the Australian Financial Review notes:
Australian blue-chips capped off the 2021 financial year with a 26 per cent surge in earnings per share, which is expected to slow to growth of 13.6 per cent in 2021-22, and 4.5 per cent in 2022-23, according to consensus estimates measured by Morgan Stanley.
Macquarie highlighted some key points from AMP's strategy update, reported by FNArena.
Among those, AMP announced an additional $115 million of cost-out through 2024.
The company also reported a "10 basis-point fee compression in Australian Wealth Management, a 10% decline in net interest margins from the bank over an indefinite timeframe and 50% loan growth by 2024".
Demerger ahead
AMP expects its 2 post-demerger businesses – AMP Limited and AMP Capital's Private Markets business – to emerge independently by mid-year.
Macquarie forecasts it will be effective in June 2022.
According to AMP:
The rationale for the demerger is to enable the two businesses to increase focus on their respective markets and growth opportunities – AMP Limited as a retail wealth manager in Australia and New Zealand, and PrivateMarketsCo as a global manager of infrastructure and real estate investments with a growing focus on international institutional clients.
Macquarie still expects "multiple headwinds" in the leadup to the completion of the demerger.
Dividends unlikely
Income investors awaiting a return to AMP's historical dividends may be disappointed.
AMP last paid an interim dividend of 10 cents per share on 1 October 2020, fully franked.
The company did not pay an interim dividend in 2021. In explaining its decision, management said:
The board continues to maintain a conservative approach to capital management to support the transformation of the business. In line with this approach, the board has resolved to not declare an interim 2021 dividend. The capital management strategy and payment of dividends will be reviewed following the completion of the demerger in 1H 22.
Analysts at both Citi and Macquarie are not expecting AMP to pay a final dividend.
How have AMP shares been performing?
The AMP share price fell 39% over the past 12 months, compared to a gain of 4% posted by the S&P/ASX 200 Index (ASX: XJO).
So far in 2022, AMP shares are down 8%.
