Maybe this will make AMP holders feel better...
AMP rides high on new reputation By MATT BELL 9 August 2024,
AMP chief executive Alexis George says the financial services group’s restored reputation is allowing it to capitalise on growth opportunities and re-engage with customers as it progresses its advice strategy with the sale of its advice licensees and self-licensed offering, Jigsaw.
The company reported a higher interim profit, coming in substantially better than market expectations, on the back of a stronger market performance.
It comes as the anticipated launch of its digital challenger bank targeting small and micro businesses remains on track to launch in the March quarter, promising full transaction capability, digital support and a 24/7 contact centre amid plans to diversify revenue and funding mix in AMP Bank.
Entireti will buy AMP’s advice licensees and Jigsaw for $10.2m, with the group to retain a 30 per cent holding in the new company.
Formerly known as Fortnum Private Wealth, Entireti will establish a new joint venture entity to acquire AMP’s financial advice licensees, Charter, Hillross and AMP Financial Planning.
This will see Entireti become Australia’s largest financial advice business service provider, with more than 1300 advisers, and the NewCo joint venture will benefit from the scale efficiencies of this operating model. AZ Next Generation Advisory will buy AMP’s minority stakes in 16 advice practices for $82.2m.
But AMP warned it would book a loss of around $30m from the sale of its Advice business over the coming six months.
Ms George said the move would allow the advice business to return to profitability and achieve improved scale.
“Advice was going to lose around $40m this year. We want to break even and have a sustainable business model. We’ve always said that the last $10m to $15m is going to be hard and it’s proven to be when it sits inside a listed and regulated company,” she said.
“When we looked at the market, we thought that maybe we weren’t the ideal owner.” Ms George said it was a good time for advice practices, but there was a need for capital to grow or for succession. She added while AMP had provided some capital, Entireti could offer more due to being a big supplier in the space.
Reports suggest US private capital juggernaut Oaktree Capital is in negotiations to invest in Italian-funded accounting and financial advice firm AZ NGZ.
Ms George said any such move would not affect the deal around its advice business.
“It’s important to acknowledge the services company would be owned by Entireti and there’s a small cross ownership, but not large,” she said.
“Azimut, the Italian backer, has committed to being a strong partner … for the enduring future, and that was important.” Entireti will deliver licensing and business services to AMP’s advice network and self-licensed practices, as well as continuing to service its existing licensees (Fortnum and PFS). Through AZ NGA, practices will have access to capital to enable planning for both growth and succession.
It came as AMP reported that its net profit after tax rose 5.4 per cent to $115m in the first half of the financial year, while it posted a statutory net profit after tax of $103m. The result was 11 per cent better than market expectations, according to Citi, adding AMP was on track for its cost targets.
A profit beat saw AMP rally to a 10-month high after shares rose 13.3 per cent to $1.28 on Thursday following a strong profit beat.
AMP would roll out a digital small business bank in the March quarter following work with British challenger bank Starling Bank, Ms George said, adding the offering would allow it to leverage its footprint more and tap into micro and small businesses.
“If we want a successful bank, we need to broaden out the funding base and the customer base. Starling is the only profitable digital bank in the UK with market share, so we wanted to leverage off someone who’s done it before.” A partially franked interim dividend of 2c per share was declared.
The Australian-20240809
