AMP tumbled -15.8% to fresh multi-year lows on Thursday after trying to hide lower margin expectations with the announcement of a new Digital Bank, not the sort of behaviour required by a company that’s been in the “naughty corner” for over 15 years. They should address investor concerns and not gloss over issues like tight margins through FY23 and into 2024. The idea of a sole trader and small business digital bank makes sense, but it’s very early, and the AMP run rate creates little confidence in a successful and profitable delivery. Importantly, this strategy goes against the ‘return of capital’ scenario that had been promoted/sold to investors, which now seems a pipe dream.
- We can see AMP bouncing strongly if we see further weakness under 80c, but it’s not a punt that would warrant core capital.
MM is neutral toward AMP around 85c
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