Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

UPDATE 3-Australia's AMP sees record outflows, doubles estimate of pension client exits

Published 24/10/2019, 12:14 pm
© Reuters.  UPDATE 3-Australia's AMP sees record outflows, doubles estimate of pension client exits
AMP
-
MTS
-
RACE
-

* Australian wealth management outflows 30% higher

* Expects A$1.4 bln in corporate pension outflows in next 12 months

* Corporate outflows expectation is up from A$700 mln in August

* Shares 1.5% higher, analysts expect volatility (Adds share reaction, analysts comments)

By Paulina Duran

SYDNEY, Oct 24 (Reuters) - AMP Ltd AMP.AX posted record third-quarter outflows in its Australian wealth management unit and doubled its estimated loss of major pension contracts to A$1.4 billion, as a client exodus after misconduct revelations gathers pace.

For the quarter ended Sept. 30, the division recorded net outflows of A$1.94 billion ($1.33 billion), a record and 30% higher than the A$1.49 billion worth of outflows a year earlier.

AMP said on Thurdsay there had not been material outflows from the loss of corporate mandates in the quarter, but doubled its 12-month estimate of corporate client losses from A$700 million in August.

AMP Chief Executive Officer Francesco De Ferrari (NYSE:RACE) said the company had achieved higher inflows during the quarter, but those were more than offset by outflows, partly due to new laws designed to limit unnecessary fees and insurance charges on pension savings.

The Australian government released legislation aimed at reducing insurance and fee costs for customers, including requiring companies to transfer inactive low-balance accounts to the Australian Taxation Office and cancel insurance for inactive members.

Despite the record outflows and downgraded guidance for corporate pension flows, shares in AMP were up 1.5% on Thursday morning as investors and analysts had braced for even worse news.

"There is near-term earnings risk for AMP around (assets under management) decline and revenue margin pressure which is likely to cause ongoing share price volatility," Credit Suisse (SIX:CSGN) analysts said.

"However, trading at a ~30% PE discount to the market ... investors appear to be allowing for this near term earnings risk."

Assets under management at AMP Capital, it's funds management unit, were also higher during the quarter, despite A$1.1 billion in outflows, while AMP Bank had strong growth in deposits, Sydney-based firm said.

The share price move was "unwarranted enthusiasm" said Brett Le Mesurier, a senior analyst at Shaw and Partners.

"AMP confirmed today that it's a long way from overcoming its cash outflow dramas," he said. "AMP Bank ... deposits increased by an impressive 4%, but no details were provided of their cost."

In August, AMP posted its biggest half-year loss since its listing, and withheld dividend for the first time, a year after the Royal Commission inquiry found the company had for years wrongfully charged fees and had attempted to mislead the regulators. has lost several major pension contracts including the business of grocery wholesaler and distributor Metcash MTS.AX and Australia Post, while other companies are reviewing their relationship their contracts with the firm. the outflows, total assets under management for the Australian wealth management unit at end-September rose to A$133.2 billion, compared with A$132.70 billion as of June 30, it said.

($1 = 1.4592 Australian dollars)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.