Insights

The AMP share price has surged 9% so far this month. Can it keep going?

What’s driving the growth in the AMP share price?
The post The AMP share price has surged 9% so far this month. Can it keep going? appeared first on The Motley Fool Australia. –

The AMP Ltd (ASX: AMP) share price has risen by 9.3% over the past month.

This compares to an 0.94% gain for the S&P/ASX 200 Index (ASX: XJO) and a 5.5% bump for the S&P/ASX 200 Financial Index (ASX: XFJ).

AMP has even outdone the big four ASX bank shares, with the best performers there being National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC), both up around 8%.

What’s driving the AMP share price up?

As my Fool colleague Tristan recently reported, AMP is seeing growth in some parts of its remaining business.

The company has sold off other segments of its business to raise cash. AMP will use the proceeds to fund share buybacks and capital returns for its long-suffering shareholders.

At a recent webinar hosted by the fund manager, Allan Gray, the AMP CEO Alexis George had this to say:

We really had to reposition the businesses we had, which is the bank and wealth management. They weren’t competitive. They couldn’t really compete against the players in the market. I think we’ve done that now on most of those businesses, in fact, all of the businesses in wealth management and they’re ready to compete.

I think we really need to explore some new revenue opportunities into new ancillary revenue and I think we’ve really committed to the retirement space.

Q1 FY22 update

The AMP share price jumped 1.7% on 5 May when the company released its Q1 FY22 AUM and cashflows update.

AMP told the market it had increased its total loan book by $500 million to $22.6 billion. Total deposits increased by $1.7 billion to $19.5 billion.

Australian wealth management assets under management decreased by $5.8 billion to $136.5 billion with net cash outflows of $1.3 billion. This was an improvement on the $2 billion outflows in the prior corresponding period.

AMP Capital assets under management on a ‘normalised’ basis declined by 0.6% to $52.5 billion.

Could AMP be taken over?

The hot topic in the banking sector right now is the announcement from Australia and New Zealand Banking Group Ltd (ASX: ANZ) that it is buying the banking division of Suncorp Group Ltd (ASX: SUN).

The potential for AMP to be taken over was raised at the Allan Gray webinar.

Allan Gray owns AMP shares in its Australia Stable Fund, representing 1.9% of the funds invested.

Allan Gray portfolio chief investment officer Simon Mawhinney said “there’s less chance of it being taken over by a big four bank than perhaps it merging with a non-big four regional bank”.

Mawhinney added:

Sure, there is some scope to merge with another bank. It might happen. I hope that if someone came to AMP and said, ‘Here’s 1.3 times NTA for AMP Bank, do you want it or not?’ I hope they would take it because we would be delighted with that outcome.

The post The AMP share price has surged 9% so far this month. Can it keep going? appeared first on The Motley Fool Australia.

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More reading

‘Ready to compete’: Will AMP seek out new opportunities or stick to its knitting?
Own AMP shares? CEO touts its ‘digital bank’ status in competitive landscape
‘CBA and Westpac are too big’: One fund manager’s take on the future of ASX 200 bank shares
AMP share price in focus as Mirvac wins control of $7.7 billion office fund
Why interest rates need to rise despite ASX carnage: economist

Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited and Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation.  The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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