On October 23, 2024, Ameriprise Financial Inc (AMP, Financial) released its 8-K filing for the third quarter of 2024. The company, a significant player in the U.S. asset and wealth management market with approximately $1.4 trillion in total assets under management and administration, reported mixed results for the quarter.
Performance Overview
Ameriprise Financial Inc (AMP, Financial) reported adjusted operating earnings per diluted share of $9.02, excluding unlocking and severance expenses, marking a 17% increase from the previous year. However, this figure exceeded the analyst estimate of $8.44. The company's GAAP net income per diluted share was $5.00, a decrease from $8.14 a year ago, primarily due to market impacts on the valuation of derivatives and market risk benefits.
Financial Achievements and Challenges
The company achieved a 22% increase in assets under management and administration, reaching $1.5 trillion, driven by strong client net inflows and market appreciation. Adjusted operating net revenues rose by 11%, supported by organic growth, robust equity markets, and higher spread revenues. Despite these achievements, Ameriprise faced challenges with unfavorable market impacts on derivatives and market risk benefits, which affected GAAP results.
Income Statement Highlights
Ameriprise Financial Inc (AMP, Financial) reported GAAP net income of $511 million for Q3 2024, a 41% decrease from the previous year. Adjusted operating earnings were $828 million, an 11% increase year-over-year. The company's pretax adjusted operating margin stood at 27%, while the adjusted operating return on equity was 51%.
Balance Sheet and Cash Flow Insights
The company returned $713 million of capital to shareholders during the quarter, highlighting its balance sheet strength and strong free cash flow generation. Available capital for capital adequacy increased by 5% to $5,523 million, reflecting Ameriprise's robust financial position.
Segment Performance
The Advice & Wealth Management segment reported a 14% increase in adjusted operating net revenues to $2.7 billion, driven by growth in client assets and increased transactional activity. The segment's pretax adjusted operating earnings reached a record high of $826 million, with margins exceeding 30%.
In the Asset Management segment, adjusted operating net revenues grew by 7% to $882 million, while pretax adjusted operating earnings increased by 23% to $245 million. The segment benefited from equity market appreciation and effective expense management.
CEO Commentary
Jim Cracchiolo, Chairman and Chief Executive Officer, stated, "Ameriprise delivered another very good quarter further demonstrating the strength of our client and advisor value propositions, complementary businesses, and strategic focus. We're generating strong revenue and earnings growth across our business."
Analysis and Conclusion
Ameriprise Financial Inc (AMP, Financial) demonstrated strong revenue growth and effective cost management, which are crucial for maintaining competitiveness in the asset management industry. However, the impact of market conditions on derivatives and risk benefits posed challenges to GAAP earnings. The company's focus on operational efficiency and strategic growth initiatives positions it well for future performance, despite the current market volatility.
Explore the complete 8-K earnings release (here) from Ameriprise Financial Inc for further details.
