AMP Strategic Value

Perennial under performer AMP has done it again. This time with a market update that its AMP bank division NIM is forecast to be lower, not just for 2nd half FY23 but also through FY24.

The updated reduction in NIM is presented in terms of the effect on FY23, but given 1HFY23 is already in the bag, the effect going into 2HFY23 and through FY24 is magnified. Morgans suggest this will have an 11-12% negative effect on group earnings in 2HF23 and FY24 earnings and a reduction in the bank division earnings of double this (negative 12-24%).

Mr Market was expecting FY23 earnings to be the trough in earnings, from which earnings will increase into the future.



Based on AMP's updated announcement it looks like, according to Morgans numbers, this will now be pushed out to FY24

Morgans Modelware EPS: FY22: $0.12 FY23E: $0.09 FY24FE EPS: $0.06 FY25E: $0.09


This is why the market hammered the stock price.

The market likes to extrapolate out 12-18 months, but it now looks like we will have to wait until CY25 to see the turn around in earnings.
That's a long way out, and with AMP disappointing so often, market confidence in AMP management execution is low.

I have taken a small half position at 86c. But I could very well be too early. Hence the small position. Given the push out to FY25 which is also CY25 for AMP, there is lots of opportunity for negative news to further depress the share price.

Time will tell.

AMP screens well for FY25, but will they deliver?