AMP declares no acquisitions on radar

ANALYSIS

AMP Limited is out of the market for major acquisitions at least until August although there is every possibility that it will be unloading more businesses that don’t fit with its objectives.

That is the bottom line of AMP Limited’s announcement to the Australian Securities Exchange this week within which it announced the completion of its sale of AMP Capital to Dexus Funds Management at the same time as conducting a “review of its balance sheet”.

Thus, if AMP Limited was ever really a bidder for Westpacs’ BT Panorama platform, then it is out of the market, declaring that it is remains focused on working through its previously announced $1.1 billion return of capital to shareholders.

Worth noting, is that yesterday’s announcement about the future of the business is the first since the company’s new Chief Financial Officer, Peter Fredricson took on role in January.

According to AMP’s chief executive, Alexis George the “go forward businesses” are banking and wealth management in Australia and New Zealand” with, of course, the AMP platform business, North, operating within the Australian Wealth Management division alongside the Master Trust business.

The problem, of course, is that in its most recent results announcement AMP confirmed that its advice business was still making a substantial loss of $68 million compared to $146 million the previous years, notwithstanding the sale of the employed business to PSK Financial Services which was completed.

Notwithstanding the halving of the AMP financial planning loss in the full-year results, there can be no assumption that it will hit break-even in six months’ time or, for that matter, in the first half of 2024.

According to yesterday’s formal AMP announcement to the ASX the next step for the company is to determine the appropriate model and cost base for the future of the business.

“This work will be completed over the next six months and reflect the forward-looking focus on AMP Bank and the Australian and New Zealand wealth management businesses, together with the China partnerships.

“Whilst FY23 controllable costs have been guided as flat due to higher inflation and the costs of transitional arrangements post completion of the AMP Capital sales, AMP believes there is opportunity to drive further operational and group office efficiency across the simplified portfolio of businesses,” it said.

The company has flagged an update no later than its first-alf announcement in August but the key statement was that “AMP’s focus remains on organic growth in banking and wealth management and it does not intend to make any material acquisitions whilst the reviews are ongoing or prior to their outcomes being announced to shareholders”.