Why did multiple brokers just downgrade AMP shares?

The AMP Ltd (ASX: AMP) share price has been diving lower since mid-September, as we can see on the chart below. After yesterday's quarterly update by the ASX financial share, some brokers have downgraded what they think of the company.

For readers who didn't catch it, AMP released its update for the three months to September 2023, which was the third quarter of AMP's financial year.

Let's remind ourselves of the highlights of the announcement.

Recap

AMP Bank said that its total loan book grew by $0.5 billion to $25 billion at the end of September 2023. Residential loan growth at the end of August 2023 was 1.6 times the overall loan system. However, growth is expected to be subdued for the remainder of the year – it continues to "actively manage its portfolio in a highly competitive market."

The bank's deposits increased by $0.8 billion to $22.1 billion during the third quarter.

Management said that the net interest margin (NIM) for the full year is now expected to be below the previous guidance of 1.30% to 1.35%. That may have been a key factor for the AMP share price pain.

Next, AMP told us about the net cash flows for its platforms and Master Trust, and the figure excludes regular pension payments to members. Net cash flows were $426 million, down from $748 million in the prior corresponding period in 2022.

North inflows from independent financial advisers grew by 17% year over year to $565 million.

The business said that platform assets under management (AUM) were flat at $68.3 billion, the same balance as June 2023. The Master Trust cash flows and AUM reflect the $4.3 billion mandate loss announced last year that transferred in August, with negative cash flows of $4.9 billion.

New Zealand wealth management's KiwiSaver achieved net cash flows of $59 million, which was down from $71 million in the prior corresponding period.

Brokers downgrade AMP shares

According to reporting by The Australian, Barrenjoey has cut its rating on AMP to underweight, which effectively means sell. The price target is $1.09, which is where it is trading right now (after a fall of more than 4% in early trading) – Barrenjoey is suggesting it'll be at this price a year from now.

The broker Citi thinks the AMP share price could do a bit better – the price target was reduced by 8% to $1.15. That suggests a possible rise of more than 5% in the next 12 months.

AMP share price snapshot

Today and the last month have not been positive, and AMP shares are down by around 17% in the last year.