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- AMP’s (ASX:AMP) net interest margins will miss its guidance of 1.3 – 1.35 per cent
- The company has blamed a competitive environment
- The bank’s CEO told investors to expect “subdued growth”
- Platforms net cashflows are down by more than $300 million YoY
- Shares are down 1.54 per cent, trading at $1.12 at 1:06 pm AEDT
AMP Bank (ASX:AMP) has posted its Q3 CY23 operations update, showing the company has exited the third quarter standing, albeit somewhat bruised.
What’s more, the company’s net interest margins are expected to fall below the previously provided guidance of 1.30-1.35 percent. The company did not state where exactly its margins will floor.
Shareholders are responding in kind with punishment, seeing the $3.04 billion market cap stock down more than three per cent in the first hour of trade today.
Macro headwinds
The same factors pressuring banks across Australia – higher competition and lower net interest margins – have also come to roost in AMP’s books.
Per the same thing that hit Commonwealth earlier this year, AMP’s customers are turning more toward term deposits.
The bank’s total loan book value grew $0.5 billion to $25 billion in Q3.
Mixed story but struggle visible
New Zealand remains a resilient market for the company as its Kiwisaver product saw cash inflows of $59 million, but this was much higher a year ago, at $71 million.
Assets under management were steady year on year (YoY) at $68.3 billion, reflecting no change in either direction.
The only headline segment that grew was financial inflows from independent financial advisers related to AMP’s super product, MyNorth Lifetime Super. Those inflows increased 17 per cent YoY to $565 million.
Net cashflows reveal $320 million decline YoY
The bank’s total deposits grew by $0.8 billion to $22.1 billion in Q3, and, platforms net cashflows stood at $426 million.
But therein lies the rub for its shareholders: YoY, that’s a huge loss. Q3 CY22 net cashflows were much higher at $748 million.
As for a bellwether regarding Australia’s investing appetite, assets under management in the equities class hardly shifted quarter on quarter – supporting Macquarie’s analysis retail investors are staying away from the ASX.
That’s more than likely a factor that led Canva to decide to stall its IPO until as late as 2026.
Tame expectations ahead
“We continue to actively manage the Bank portfolio in what remains a highly competitive environment, particularly as the Term Funding Facility (TFF) refinancing continues across the market,” AMP CEO Alexis George said.
“We expect to see subdued growth for the remainder of the year as we continue to manage Net Interest Margin (NIM), with full-year NIM now expected to be below previous guidance of 1.30-1.35 per cent.”
AMP, the home of Australia’s most loved economist Shane Oliver, has not been able to dodge a bad rep this year, despite the positive commentary from management.
A class action related to Australia’s blink-and-you-missed-it banking inquiry was no doubt part of this.
AMP’s lacklustre year
One-year performance is down 7.26 per cent and the stock is down 17.49 per cent year to date (YTD).
Versus the ASX200 it’s underperforming to the tune of 11.5 per cent; compared to the financials sector, underperforming by 7.37 per cent.
This is part of the reason why only one broker currently rates AMP as a “buy.”
Elsewhere, seven brokers say “hold,” while another six brokers say “sell”.
Talk about stacked odds.
AMP shares were down 1.54 per cent, trading at $1.12 at 1:06 pm AEDT.
