What is weighing down the AMP share price today?
Shares in the beleaguered financial services giant have dropped more than 10% in the last month alone and today was no different.
Investors in AMP (ASX: AMP) have had little reason to cheer over the last month with the wealth management giant’s stock giving up most of its recent gains. On Friday, the stock dropped another 2.9% to $1.015 in early trading.
Why is the AMP stock price slipping?
The latest drop comes on the back of AMP on Friday announcing it will take additional impairment charges of $325 million in its full year 2021 financial results.
The charges relate to write-offs in relation to deferred tax assets, a write-down of intangible items, some onerous lease contracts and other impairments and adjustments.The post-tax charge of $325 million will reduce AMP’s capital position by $220 million but is not likely to hurt the group’s after-tax profit.
The decision follows a comprehensive review of AMP’s balance sheet ahead of the planned demerger under which the group will spin off its private markets investment arm AMP Capital by the first half of 2022.
AMP’s new CEO Alexis George said the balance sheet review had ensured that assets are recorded in line with future strategic directions ahead of the demerger.
“The charges are mainly non-cash and related to legacy issues, and our action will ensure that both businesses are in a stronger position to take advantage of opportunities in the future,” she said in a statement to the ASX.
Ongoing challenges
The impairments are the latest write-offs for the wealth management giant as it picks up the pieces after years of legal and management woes.
The wealth giant has struggled since the findings from the Financial Services royal commission in 2018 of widespread misconduct at the company, which prompted the exit of senior executives and left AMP struggling with top leadership issues since then.
AMP last month recorded a one-off expense of $65 million in its 2021 accounts following the sale of its remaining 19.1% stake in Resolution Life’s Australia business to the UK-based insurance group for $524 million. It has also previously announced a provision of $45 million towards remediation of superannuation matters.
Investors have been pinning their hopes on efforts to restructure the company as well as the launch of a $200 million share buyback, but this has failed to bolster the company’s market value. AMP’s share price is down nearly 40% so far in 2021.
The group is due to unveil further details on the planned spin-off of AMP Capital next week at an investor day.
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