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Ameriprise (AMP) Rides on Business Expansion, Outflows Rise
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Ameriprise Financial (AMP - Free Report) is well positioned for top-line growth in the quarters ahead, given its constant business restructuring efforts, along with its diversified investment portfolio. However, significant outflows in the company’s Asset Management segment and steadily rising expenses are expected to hurt its financials.
Looking at its fundamentals, the company’s net revenues (GAAP basis) witnessed a CAGR of nearly 1% over the last five years (2016-2020). Ameriprise constantly modifies its product and service-offering capacity to keep pace with dynamic market needs. This strategy, along with asset growth and efforts to launch products, is likely to keep supporting top-line growth in the quarters ahead.
Moreover, Ameriprise has been constantly focusing on core operations to remain profitable. It has grown inorganically and restructured its business from time to time. In April, the company inked an agreement with Canada-based Bank of Montreal (BMO - Free Report) to take over its EMEA asset management operations for roughly $845 million. This will further strengthen the company’s wealth and asset management businesses. This step is similar to what other asset managers like BlackRock (BLK - Free Report) and Franklin Resources (BEN - Free Report) have been doing to expand inorganically.
Also, the company plans to offer a range of banking and credit products through its federal savings bank — Ameriprise Bank — to its wealth management clients. The initiatives are expected to further support financials.
Moreover, the company’s capital-deployment activities remain impressive. Ameriprise regularly hikes dividend. In April 2021, it announced a dividend hike for the 14th time since 2010. Also, in August 2020, it announced an additional repurchase plan worth $2.5 billion (expiring in September 2022). As of Mar 31, 2021, the company had $1.9 billion remaining under the authorization. Given a strong balance sheet and liquidity position, and decent earnings growth, the company is expected to be able to sustain efficient capital deployment plans.
However, the company’s expenses (GAAP basis) witnessed a CAGR of almost 1% over the last four years (2017-2020). Although Ameriprise’s initiatives to focus on cost management have resulted in controlled general and administrative (G&A) expenses, overall costs are expected to remain elevated in the near term due to advertising campaigns, hiring and technology upgrades.
Also, the Asset Management segment, which is one of the major sources of Ameriprise’s revenues, has been continuously witnessing significant outflows over the past several years. While the segment witnessed overall net inflows of $5.7 billion in 2020, outflows are expected to continue in the quarters ahead amid a tough operating backdrop. This might adversely impact the segment’s performance.
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Ameriprise (AMP) Rides on Business Expansion, Outflows Rise
Ameriprise Financial (AMP - Free Report) is well positioned for top-line growth in the quarters ahead, given its constant business restructuring efforts, along with its diversified investment portfolio. However, significant outflows in the company’s Asset Management segment and steadily rising expenses are expected to hurt its financials.
Looking at its fundamentals, the company’s net revenues (GAAP basis) witnessed a CAGR of nearly 1% over the last five years (2016-2020). Ameriprise constantly modifies its product and service-offering capacity to keep pace with dynamic market needs. This strategy, along with asset growth and efforts to launch products, is likely to keep supporting top-line growth in the quarters ahead.
Moreover, Ameriprise has been constantly focusing on core operations to remain profitable. It has grown inorganically and restructured its business from time to time. In April, the company inked an agreement with Canada-based Bank of Montreal (BMO - Free Report) to take over its EMEA asset management operations for roughly $845 million. This will further strengthen the company’s wealth and asset management businesses. This step is similar to what other asset managers like BlackRock (BLK - Free Report) and Franklin Resources (BEN - Free Report) have been doing to expand inorganically.
Also, the company plans to offer a range of banking and credit products through its federal savings bank — Ameriprise Bank — to its wealth management clients. The initiatives are expected to further support financials.
Moreover, the company’s capital-deployment activities remain impressive. Ameriprise regularly hikes dividend. In April 2021, it announced a dividend hike for the 14th time since 2010. Also, in August 2020, it announced an additional repurchase plan worth $2.5 billion (expiring in September 2022). As of Mar 31, 2021, the company had $1.9 billion remaining under the authorization. Given a strong balance sheet and liquidity position, and decent earnings growth, the company is expected to be able to sustain efficient capital deployment plans.
However, the company’s expenses (GAAP basis) witnessed a CAGR of almost 1% over the last four years (2017-2020). Although Ameriprise’s initiatives to focus on cost management have resulted in controlled general and administrative (G&A) expenses, overall costs are expected to remain elevated in the near term due to advertising campaigns, hiring and technology upgrades.
Also, the Asset Management segment, which is one of the major sources of Ameriprise’s revenues, has been continuously witnessing significant outflows over the past several years. While the segment witnessed overall net inflows of $5.7 billion in 2020, outflows are expected to continue in the quarters ahead amid a tough operating backdrop. This might adversely impact the segment’s performance.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency have sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>