AMP half-year earns lift in Morningstar fair value estimate

Research and ratings house, Morningstar has been sufficiently impressed by AMP Limited’s half-year results that it has lifted its fair value estimate for the company by 3% to $1.50 per share.

In an analyst report issued on Friday, Morningstar said its actions had been influenced by raising net interest margin (NIM) projections for AMP Bank and efforts to reduce funding costs but noted that the market “is underestimating competition risks”.

“We believe fund growth will revert to more moderate levels due to competition. Tariff uncertainty may also resume, halting the recent relief market rally, which we think propelled recent flows. Rising pension payouts as AMP’s investor base ages could also counteract flow improvements in the long term,” Morningstar senior analyst, Shaun Ler said.

The analysis also said future margin expansion is likely to be constrained. AMP Bank’s NIM trails the major banks, which enjoy a cost advantage. Greater uptake of lower-priced platform products also contributes to this dynamic. Management also said incremental investments are needed to grow more promising products like North,” he said.

“Given intense competition in the platforms space, AMP is focusing on offering retirement-income centric products through its platforms, while introducing digital advice tools.

“We expect these initiatives to prevent further erosion in its competitive standing, evidenced by improved flow trends and active adviser numbers. However, we don’t expect these measures to help AMP regain lost share from specialty platforms like Hub24 and Netwealth,” Ler’s analysis said.

“Competing retirement income operators such as Challenger have similarly partnered with other platforms to offer their solutions. AMP’s proportion of inflows from transfers/rollovers—usually from another legacy or competing product—stands at 69% as of June 2025, below the peak of 74% in September 2023.”