AMP Earnings: Turnaround Is Manifesting

We lower our fair value estimate for no-moat AMP to AUD 1.20 per share from AUD 1.30 due to lower expected corporate division earnings and a reduced year-end cash balance partly due to shareholder payouts. However, we still see some value in AMP’s shares at current prices. Earnings turned around in 2023, and we expect growth in the medium term. Underlying net profit after tax growth of 7% from 2022 is as expected, but there were divisional variances. Core business earnings exceeded forecasts, driven by lower operating expenses, reinforcing our projections for further cost reductions through 2025. Conversely, in the corporate segment, poor investment returns from external partnerships tempered our medium-term earnings outlook. Stranded costs from prior corporate activity also dampened earnings.