AMP admits to ASX some investors have become impatient

AMP Limited has defended its financial reporting in the face of a “please explain” from the Australian Securities Exchange (ASX) around its full-year results announcement in February resulting in a 13.36% decline in the company’s share price.

And, in doing so, the company has acknowledged that some of institutional investors have been less than pleased with AMP’s progress, including around its financial advice business.

In doing so, AMP has claimed that the company’s net profit after tax (NPAT) has shown more variability over recent periods due to the timing of asset realisations, including the accounting for continuing operations and discontinued operations.

As well, it said that the variability was associated with the separation of those business and the ongoing strategic transformation of AMP.

The AMP letter to the ASX also suggested that feedback from the market, including some of AMP’s larger shareholders, suggested the decline in the company’s share price had been driven by a combination of factors.

It said those factors included:

• Disappointment with the forward-looking commentary in the FY 22 results announcements around cost base improvements, the speed and extent of AMP’s capital return program, and the outlook for the Advice business (despite AMP having informed the market of most of these matters in previous announcements);
• A broader market view of headwinds for the banking market in particular, including a highly competitive mortgage market likely impacting future margins, inflation and economic stress in the housing market.
• Reported earnings being at the lower end of AMP’s ivew of consensus.

The AMP letter went on to say that the company did not consider that its reported underlying NPAT or statutory NPAT differed materially from the market’s expectations of AMP’s FY 22 earnings for the Relevant Reporting Period of sell-side analysts covering AMP.

“Further, AMP is of the view that earnings in the prior corresponding period cannot be used as a guide as past performance was not considered a reliable indicator of likely earnings in FY22. This is particularly so given the substantial transformation (including multiple asset sales) AMP has been executing over recent years and continues to execute.”