Is the market changing the stance on AMP?

  • Apr 06, 2019 AEDT
  • Team Kalkine
Is the market changing the stance on AMP?

AMP Limited (ASX: AMP) had recently made an announcement that Geoff Roberts would be retiring from the Board at the conclusion of 2019 Annual General Meeting (or AGM) which would take place on May 2. The company had recently published its annual report for FY 2018 in which it stated that the company began structural transformation which would place the business better for the future as well as improve the performance for the shareholders. The company also noted that the final report from the Royal Commission provided a turning point for the financial services sector with respect to rebuilding trust with the customers, shareholders as well as the community. We would now discuss the performance of the company for FY 2018.

The company stated that its 2018 financial performance reflected challenges which they have faced. AMP Limited reported the underlying profit amounting to $680 million for the year ended December 31, 2018. However, the profit attributable to shareholders, for the same period, amounted to $28 million. Also, the company stated that they declared a reduced 2018 final dividend amounting to 4 cents per share and, as a result, the total dividend paid for 2018 amounted to 14 cents per share. The dividend demonstrates the view of the board that, because of a customer-centred business, they should maintain a robust capital position.

In the annual report for FY 2018, the company had also provided information related to FY 2019. The company stated that FY 2019 would be the year of transition as the company would be positioned for the future. It is also important for the market players to know that the management would be mainly focused towards separation of wealth protection and mature businesses to Resolution Life, towards the progress of remediation program as well as strengthening the risk management, governance, and controls.

Also, the company’s management would continue to drive the performance in the core operating businesses. The management also added that after the unloading of wealth protection and mature businesses, they would be having 4 core operating businesses i.e. wealth management in Australia and New Zealand, AMP Bank as well as AMP Capital. In the annual report for FY 2018, the company had also mentioned about FY 2018 priorities which were to prioritise customers and restore confidence, to transform advice, reprioritise portfolio review, strengthen the risk management, internal controls and governance as well as maintain the business momentum.

We would now have a look at how the stock of AMP Limited has performed in the recent past. In the span of the previous six months, the stock posted the return of -26.89% while, in the time frame of three months, the stock delivered the return of -9.72%. As per Australian Securities Exchange (or ASX), as on April 4, 2019, the company had the annual dividend yield of 6.28%. According to the same source, the market capitalisation of AMP Limited, on the same day, stood at ~$6.57 billion at CMP of $2.220. Also, the stock price of AMP Limited is trading towards the 52-week lower level.


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