The AMP Ltd (ASX: AMP) share price has recovered from an early sell-off after the company posted its update for the quarter ended March.
Within the update, it was revealed Woolworths Group Ltd (ASX: WOW) had ended its contract with AMP for corporate superannuation services.
The move is likely to drain another $4 billion from AMP's funds under management sometime in the first half of 2023.
AMP shares withstanding the bad news
It comes on top of the outflows of $1.3 billion in the first quarter of 2022 from its Australian Wealth Management (AWM) division.
This caused AWM's assets under management (AUM) to drop to $136.5 million in the quarter from $142.3 million in Q1 2021. The decline isn't just caused by the outflows but by investment losses too.
Loss of clients was also an issue for the AMP Capital division. Its normalised AUM dipped 0.6% to $52.5 billion in the quarter compared to the previous quarter.
This was largely due to client redemptions from China Life AMP Asset Management money market funds.
Dip buyers supporting the AMP share price
The news initially sent the AMP share price lower, but investors have taken a glass-half-full view. The shares are currently trading 1.85% higher at $1.212 compared with a 0.63% advance by the S&P/ASX 200 Index (ASX: XJO).
Management reassured investors that the loss of the Woolworths contract would not have a material impact on group profitability.
While the cash outflow from AWM in the latest quarter isn't great news, it's an improvement from the $2 billion in outflows the embattled group reported in the same period last year.
AMP winning mortgage market share
What's more, AMP Bank managed to grow its mortgage business by twice the pace of the industry. Its total loan book increased by $500 million to $22.6 billion in the first three months of the year despite intense competition.
Its super and investment platform business, North, is also growing. Inflows from external financial advisers increased by 53% to $342 million during the period compared to Q1 2021.
What did management say?
Commenting on the update which appears to be fuelling the AMP share price today, chief executive Alexis George said:
We're seeing positive signs of growth and momentum and have set a clear path to accelerate the transformation of AMP Limited with the announcement of the sale of Collimate Capital's real estate and infrastructure equity businesses, enabling an increased focus on the growth of our retail banking and wealth businesses.
With the transactions we announced last week, we have set AMP up for a strong and sustainable future, with a clear strategy to grow AMP Bank and our wealth management businesses in Australia and New Zealand.
AMP recently announced the sale of some of its businesses. The group could reap up to circa $2 billion in cash from the divestments, which may be used to fund capital returns.
The AMP share price is up 24% over the past month and 21% this year to date.
