AMP share price dives 12% on earnings miss

AMP's report wasn't enough to impress investors.

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Key points

  • AMP announced its FY22 result to investors
  • Underlying net profit sunk by more than a third
  • A dividend of 2.5 cents per share was declared

The AMP Ltd (ASX: AMP) share price has plunged 12% on Thursday morning after the diversified ASX financial share revealed its FY22 result to the market.

After opening down at $1.26, AMP shares have sunk further. It is currently down over 12%, trading at $1.14.

AMP share price dives despite finally reporting a profit in FY22 result

  • Underlying net profit after tax (NPAT) down 34% to $184 million
  • Statutory NPAT of $387 million, up from a $252 million loss in FY22
  • Final dividend declared of 2.5 cents per share, franked at 20%
  • Australian wealth management assets under management (AUM) fell by 13% to $124.2 billion
  • The AMP Bank residential mortgage book grew by $2 billion

AMP explained that its underlying NPAT fell primarily because of investment market volatility which hurt AUM. There was also "strategic repricing" in the wealth management businesses and a reduction in the net interest margin (NIM) – lending profitability – for AMP Bank.

However, AMP was able to tell investors that those earnings headwinds were partially offset by ongoing cost cuts. Across the group, costs were reduced by $54 million (excluding AMP Capital discontinued operations).

What else happened in FY22?

AMP highlighted that this was a "solid financial performance in a challenging macroeconomic environment", while there has been "significant progress" on its strategy to simplify and reposition AMP.

Part of that process involved the sale of its infrastructure debt platform to Ares for a total consideration of A$578 million.

In 2022, AMP also announced the sale of Collimate Capital's international infrastructure business to DigitalBridge, for an upfront consideration of A$462 million, with a total value of up to A$699 million.

The AMP share price rose 30% in 2022 as it unlocked value for shareholders through divestments.

What did management say?

The AMP CEO Alexis George said:

Our profit for the year reflects the challenging economic environment we are facing, as well as strategic decisions to reprice our offers in Master Trust and Platforms to deliver both highly competitive and attractive offers.

We are seeing positive momentum around the transformation of our Advice business, where we have more than halved the losses, and our key growth businesses – AMP Bank and Platforms – are starting to benefit from the investments we are making in those businesses. In our flagship North platform, we have continued to increase the percentage of flows from the independent financial adviser market.

What's next?

The business has a number of priorities for the financial year ahead.

It wants to finish the remainder of its share buyback and other capital management initiatives to return $1.1 billion to shareholders while maintaining a prudent approach to capital management.

AMP will continue to simplify the business, maintain cost discipline and progress the transformation of its advice segment to become a sustainable, standalone business.

The ASX financial share wants to grow its bank through its digital channels while growing the financial advice side of the business with better service for clients and advisers.

Finally, management wants to explore new growth opportunities, including in adjacent markets. It also wants to continue to embed new purposes and values across AMP.

AMP share price snapshot

While 2022 was a year of recovery, the AMP share price is now only up by 5% over the past six months following today's plunge.

Motley Fool contributor Tristan Harrison 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 Scott Phillips.

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