Eagle-eyed market watchers have likely noticed an interesting occurrence with AMP Ltd (ASX: AMP) shares lately. The ASX financial company has been buying back its own stock on market.
As of this morning, AMP had secured more than 32 million of its shares since its buyback program began last week.
The move has left many onlookers scratching their heads, perhaps wondering about the financial services provider's end game. But wonder no more.
Keep reading as we dive into all the details on the company's current on-market buy-back.
Right now, the AMP share price is trading at $1.185, 1.72% higher than its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) has lifted 0.03% this morning.
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Why is AMP buying back its shares?
AMP is buying back its shares as part of a $1.1 billion capital return announced last month.
The current share buyback is just one portion of the planned return. It's ultimately expected to be worth $350 million and will run until June 2023.
The move will help bolster the value of the company's remaining shares by reducing the number of outstanding shares on issue. Thus, its future profits will be spread across fewer shares, increasing its earnings per share (EPS).
The capital return will also work to reduce the company's surplus capital, which sat $1.5 billion above its board's requirements at the end of June.
AMP plans to return another $750 million to shareholders this financial year. It expects to do so through a combination of capital return, special dividend, and further buybacks.
The company will also allocate around $400 million of liquidity to pay down its debts and de-leverage its balance sheet.
AMP's underlying profit fell 24.5% last half, slipping to $117 million. The company hasn't declared a dividend since 2019.
The AMP share price is currently trading within 3% of its 52-week high of $1.22, reached in May.
