AMP Shares Surge 70% Over the Year, Here's Why.

2 min read | January 17, 2025 11:40 AM AEDT | By Team Kalkine Media

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AMP Shares Surge 70% Over the Year, Here's Why. — Image source: shutterstock

Operational Growth

AMP’s latest update for Q3 FY24 highlights several positive developments:

Platforms Net Cash Flows: Net cash flows reached $750 million, marking a 76% year-on-year increase. Inflows from independent financial advisers (IFAs) surged 47% to $832 million.
Assets Under Management (AUM): The company’s platforms AUM grew by 4.5% quarter-over-quarter to $78.1 billion. Its superannuation and investments division also saw AUM rise 3.3%, while net cash outflows reduced by 46% to $334 million.
New Zealand Wealth Management: Net cash flows climbed to $40 million, up $34 million year-on-year, with AUM increasing to $11.6 billion from $11.2 billion in the previous quarter.
AMP Bank Growth: The loan book expanded by $0.1 billion to $23 billion, while total deposits grew by $0.3 billion to $20.9 billion.

This robust growth reflects a strong turnaround in AMP’s underlying operations, improving its profit potential.

Dividend Payments

AMP’s improving financial performance is expected to bolster shareholder returns. According to UBS, AMP could pay an annual dividend of 7 cents per share in FY25, equating to a forward dividend yield of 4.3% based on the current share price.

Valuation and Earnings Outlook

Although AMP’s earnings are still recovering from previous lows, UBS forecasts steady growth in net profit over the coming years:

FY24: Projected net profit of $222 million, valuing AMP shares at 20x FY24 earnings.
FY25–FY28: UBS anticipates net profit rising to $278 million in FY25, followed by continued increases to $301 million by FY28. This trajectory suggests a declining valuation multiple, with AMP trading at less than 15x FY25 earnings, highlighting its growth potential at an attractive valuation.

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