Ameriprise Financial Q3 2024 Earnings Call: Robust Growth Reported

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Ameriprise Financial Q3 2024 Earnings Call: Robust Growth Reported

Ameriprise Financial (AMP) reported robust financial performance in its Q3 2024 earnings call. Assets under management and administration (AUMA) significantly increased by 22% to $1.5 trillion. The company's adjusted operating net revenue rose by 11% to $4.4 billion, and the earnings per share, excluding severance expenses, grew by 17%. Ameriprise also highlighted a strong return on equity, rising to 50.7% compared to the previous year's 49.6%.

Key Highlights:

  • Ameriprise Financial's AUMA increased by 22% to reach $1.5 trillion.
  • Adjusted operating net revenue rose by 11% to $4.4 billion.
  • Earnings per share, excluding severance expenses, increased by 17%.
  • Return on equity stood strong at 50.7%, up from 49.6% the previous year.
  • Wealth Management client assets exceeded $1 trillion, with significant growth in fee-based investment advisory wrap flows.
  • The Retirement & Protection Solutions and Asset Management segments also reported growth in sales and assets.
  • Ameriprise plans to introduce new savings and lending products and enhance advisor productivity through advanced analytics and artificial intelligence.

Company Outlook:

  • Ameriprise plans to launch new offerings, including bank certificates of deposit, fixed credit collateral, and HELOCs.
  • The bank's net interest income is expected to remain stable or increase.
  • Operating margins in Asset Management are projected to remain strong between 35% and 39%.
  • The company aims to return 80% of its capital to shareholders in 2024, with similar expectations for 2025.

Declining Points:

  • Net outflows in Asset Management improved by 40% year-on-year but remained at $2.4 billion.
  • The competitive environment in Asset Management may affect advisor acquisition costs.

Rising Points:

  • Wealth Management achieved record levels of client assets, with net inflows totaling $46 billion over the past year.
  • The Retirement & Protection Solutions segment recorded double-digit growth in sales of variable lifetime income annuities and life and health insurance.

Underperforming Areas:

  • Despite improvements, the Asset Management segment experienced $2.4 billion in net outflows.

Q&A Highlights:

  • Executives expressed confidence in the profitability and management of the existing long-term care portfolio.
  • Ameriprise does not plan to absorb losses similar to recent industry transactions, as the long-term care ledger adds shareholder value.
  • The company is flexible in utilizing $2 billion in excess capital through share buybacks or strategic acquisitions.

Summary: Ameriprise Financial demonstrated strong financial growth and strategic positioning for future expansion. With plans to enhance banking services and focus on providing high returns for shareholders, Ameriprise maintains confidence in its operational strategies and market opportunities. The company management is committed to creating long-term shareholder value and adapting to changing client needs in a dynamic economic environment.

InvestingPro Insights: Ameriprise Financial's strong Q3 2024 performance is further supported by critical metrics and predictions from InvestingPro. The company's market capitalization impressively stands at $49.13 billion, reflecting its significant presence in the financial services sector.

One of the most noteworthy InvestingPro Tips is that Ameriprise has increased its dividend for 19 consecutive years, demonstrating a consistent commitment to shareholder returns. This aligns with the company's aim to return 80% of its capital to shareholders in 2024 and 2025. Additionally, the 1.14% dividend yield and 9.63% dividend growth rate over the last twelve months as of Q2 2024 highlight the company's focus on rewarding investors.

The company's profitability is evident in the growth of adjusted operating net revenue and earnings per share. This is supported by a robust gross profit margin of 58.34% and an operating income margin of 35.6% for the twelve months ending in Q2 2024, as shown in InvestingPro Data. These figures underpin Ameriprise’s strong financial position and its ability to generate substantial profits from operations.

Ameriprise's stock performance has been particularly impressive, with a one-year total price return of 68.5% according to the latest data. This exceptional return is consistent with the company’s growth report in AUMA and solid earnings results.

It is important to note that InvestingPro offers 12 additional tips for Ameriprise Financial, providing comprehensive analysis on the company’s financial health and market position. These insights could be valuable for those looking to make informed investment decisions based on a broader range of metrics and expert observations.