Q4 2024 Earnings Summary
- Strong performance and expected growth in the Retirement & Protection Solutions (RPS) segment: Ameriprise reported that the RPS segment generated $61 million in profit for 2024 and anticipates continued growth and profitability. They had a very good sales year, particularly in higher-margin Variable Universal Life (VUL) products, and they see good transactional growth and a solid liability base, supporting a positive outlook for 2025.
- Successful repositioning of the bank's investment portfolio positions Ameriprise to sustain net interest income (NII): The company has repositioned 87% of its bank investments into fixed-rate, high-quality, and high-yielding securities. This strategic move, along with adjustments to client crediting rates, positions them well to sustain and continue net interest income despite the impact of interest rate cuts.
- Ongoing efficiency improvements and expense management expected to enhance profitability: Ameriprise has been proactively managing expenses through transformations and reengineering processes. In the Asset Management segment, they have taken out a lot of costs, which is expected to pay off as sales increase both in the U.S. and Europe. The company expresses confidence in continuing to manage expenses effectively while investing in growth opportunities, which is expected to enhance margins and profitability in 2025.
- Asset Management business facing pressure with negative net flows and uncertainties in growth: The Asset Management segment has been experiencing pressure, with the CEO acknowledging that the business is "under pressure" unless they move into passive or alternative spaces where growth is occurring. Despite transforming the business and taking out costs, flow rates have been under pressure, and institutional growth is described as "a little more lumpy". This suggests challenges in achieving organic growth in this segment.
- Net Interest Income (NII) uncertainties due to rate cuts and market variables: The company's net interest income from its banking operations may be affected by recent Fed rate cuts. While management expresses confidence in their positioning, they acknowledge there are "a lot of variables" that could impact their ability to "sustain and continue net interest income". Additionally, sweep cash and certificates will be "impacted by rate reduction" , indicating potential pressure on NII.
- Potential impact on earnings due to increased expenses and investments: The company is making significant investments in technology and AI capabilities, leading to increased G&A expenses associated with activity and investment in growth. Management mentions that part of the variable expense is in G&A and is not "fixed overhead-type things". This could potentially impact margins, especially if revenue generation does not keep pace with expense growth.
| Metric | YoY Change | Reason |
|---|---|---|
Consolidated Total Revenue | +109% (from $4,168m to $8,753m) | AMP’s revenue more than doubled year-over-year. This dramatic increase suggests that AMP built on its prior period performance by significantly expanding its core revenue-generating activities—potentially through enhanced fee-based services or market opportunities—resulting in a much larger revenue base. |
Net Income | +184% (from $377m to $1,071m) | AMP’s net income surged by 184%, reflecting not only the strong revenue expansion but also an improvement in operating efficiency compared to the previous quarter. The strong growth in profit margins relative to revenue indicates effective cost-management and possibly a higher contribution from high-margin segments. |
Basic EPS | +190% (from $3.70 to $10.74) | Basic EPS increased by nearly 190% as a direct result of the substantial net income growth and potential share repurchase activity that reduced the weighted-average shares outstanding relative to the prior period. This robust EPS growth underscores improved profitability on a per-share basis. |
Interest Expense | -8% (from $84m to $77m) | Interest expense declined by 8% despite the revenue and profitability surge, indicating better debt management or improved credit terms relative to the previous period. This reduction, when contrasted with the substantial increases in revenue and income, suggests that AMP was able to lower financing costs even as it scaled up its operations. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Capital Return | FY 2025 | 80% of operating earnings to shareholders | Continue returning capital to shareholders | no change |
G&A Expenses | FY 2025 | Flattish | Manage G&A expenses prudently; transformation-related expenses from 2024 carry over, with severance and cloud conversion costs dissipating by mid-year | no change |
Sweep Cash | FY 2025 | No prior guidance | Sweep cash balances stable at end of December; seasonal elements expected to reverse in January | no prior guidance |
Asset Management Margins | FY 2025 | No prior guidance | 29% margin in Q4 2024 is considered a reasonable expectation going forward | no prior guidance |
Loan Growth | FY 2025 | No prior guidance | New products (e.g., fixed pledge loans in Q1 2025, HELOCs in Q2 2025, checking accounts later) expected to support loan growth | no prior guidance |
Wrap Flows | FY 2025 | No prior guidance | Consistent wrap flow trends expected, though January is typically hard to gauge | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Retirement & Protection Solutions | Previously consistently strong: Q3 ($208M, +2%), Q2 ($196M, +4%), Q1 ($199M, +3%). | Strong earnings ($213M pretax, $816M FY) with high quality and cash flow. Driven by market tailwinds and higher interest income, offset by distribution costs. | Stable growth in segment performance |
Asset Management Net Flows | Q3 improved outflows by 40% YOY; Q2 outflows of $4B but better than prior year; Q1 net outflows. | $1.3B net inflows, up $6B YOY. Retail inflows offset institutional outflows. Margin at 39%. | Improving flows despite some institutional outflows |
Net Interest Income & Rates | Q3 stable or increasing; Q2 & Q1 showed NII growth helped by favorable rates. | Expect higher NII in 2025; repositioned bank portfolio to 87% fixed. | Positive and carefully managed |
Bank Portfolio Repositioning | Q3 extended duration >3 years; Q2 investing at >6%; Q1 annual $3B repositioning. | Shifted from floating to fixed (5% yield, ~3-year duration) to manage rate cuts. Raised fixed rate allocation to 87%. | Continuing shift, enhanced stability |
Advisor Recruitment & Retention | Q3 added 71 advisors, Q2 slowed but rebounded pipeline, Q1 hired 64. | Added 91 experienced advisors in Q4, strong retention, and rising productivity. | Increasing after brief Q2 lull |
Partnerships (Fin. Inst. Channel) | Q3/Q2 also not mentioned; Q1 cited Comerica partnership success and a pipeline of smaller deals. | No mention in Q4 [—]. | Discontinued mentions after Q1 2024 |
LTC Block Exposure | Q3 concluded LTC block is better retained; Q2 positive contribution; Q1 added $16M. | Generated $61M in earnings, benefiting from claims performance and rate actions. | Consistently performing, viewed as additive |
Technology & AI | Q3 invests in AI/analytics; Q2 no mention; Q1 highlighted AI/data spend [—]. | Using robotics and early generative AI to boost adviser/service efficiency, though still in early stages. | Ongoing investment in automation and AI |
Expansion of Banking Products | Q3 planned 2025 expansions, Q2 noted new credit products, Q1 discussed checking and mortgage additions. | Launching pledge loans (Q1 ‘25), HELOCs (Q2 ‘25), plus CDs/checking. | Gradual rollout of new offerings |
Structured & VUL Growth | Q3 structured +13%, VUL +25%; Q2 structured +60%, VUL +24%; Q1 strong structured +32%, VUL +8%. | VA sales +15%, protection sales +26% with focus on VUL. | Continued strong sales momentum |
Expense Management & Efficiency | Q3 and prior calls consistently stressed reengineering, flat or declining G&A, selective tech investments. | G&A well managed, early cloud cost to taper in 2025, some AI/automation benefits. | Consistent focus, balancing growth investments |
Shareholder Returns & Buybacks | Q3 returned $713M, Q2 $693M, Q1 $650M; targeting ~80% payout, with capacity for higher. | Returned $768M in Q4, totaling $2.8B for 2024 (~78% of op earnings); history of strong buybacks. | Sustained high capital return to shareholders |
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Bank Net Interest Income Outlook
Q: Is 2025 net interest income expected to be higher than 2024?
A: Management expects net interest income in 2025 to be higher than in 2024. They've repositioned the bank's fixed assets from 75% to 87% fixed-income investments, added $2.3 billion in deposits from seasonal growth, and adjusted client crediting rates to align with interest rate changes. They believe they're well-positioned to sustain and grow NII despite market variables. -
Capital Strategy and M&A
Q: How are you approaching capital strategy and inorganic opportunities in AWM?
A: The company consistently redeploys capital through buybacks and dividend increases based on strong cash flows. While acquisitions are currently pricey—particularly in wealth management—they focus on targeted opportunities and bringing in the right advisors. They're investing organically to broaden channels and feel confident about growth without relying heavily on large acquisitions. -
Asset Management Growth Drivers
Q: Can Asset Management return to neutral organic growth, and what will drive improvement?
A: Management sees a path to neutral organic growth by transforming the business, improving efficiency, and reducing costs. Sales are increasing, especially in growth products and formats like SMAs and models, which have already grown over $35 billion. They're launching active ETFs in response to industry shifts, leveraging strong mutual funds, and expanding in Europe and Japan, though institutional flows may remain uneven. -
Organic Flows and Recruiting Outlook
Q: Do you anticipate a return to 5%+ organic growth in AWM with recruiting?
A: They've observed a pickup in net client flows and expect the wrap business to maintain strong momentum. While recruiting is competitive, their pipeline looks good, and they're enhancing technology and client experience to boost productivity. Although exact growth rates are hard to predict, they view the environment positively post-election, with potential for solid GDP and earnings growth. -
Expense Management and G&A Expectations
Q: How are you managing expenses and G&A in 2025?
A: The company continues to manage G&A tightly, having implemented actions in 2024 that will carry into 2025. They're investing prudently in growth and technology, including AI capabilities, while ensuring expenses align with revenue generation. Some technology transformation costs will dissipate after the first half of the year, and they expect to see benefits from prior transformations in Asset Management. -
Loan Growth and New Bank Products
Q: What are your expectations for loan growth in the bank?
A: They're launching new products like fixed pledge loans in the first quarter and HELOCs in the second quarter, along with CDs and a checking account later in the year. These additions aim to increase lending and deposits, diversifying beyond residential mortgages. Over time, they expect to build a robust loan portfolio as they continue enhancing the bank's capabilities. -
Alternative Investments Demand
Q: Is demand for alternatives increasing in AWM?
A: They've added a digital alternatives platform for advisors, expanding due diligence and product offerings. Although currently a small segment, they anticipate growth in alternatives, especially among upper-market clients. It's in early stages, but as advisors integrate these products, alternatives are expected to become a meaningful part of portfolio allocations, despite illiquidity considerations. -
AWM Margin Expectations
Q: Is the 29% AWM margin sustainable after Fed rate cuts?
A: Management believes the 29% margin achieved in the fourth quarter is a reasonable expectation going forward, despite the impact of rate cuts. -
Client Cash Levels Outlook
Q: Will client cash levels revert to historical norms?
A: Client cash levels are currently higher due to attractive short-term interest rates. Over time, as rates stabilize and the longer end of the curve picks up, they expect cash positions to decrease, with more money gradually shifting back into the market. However, cash levels may remain elevated compared to historical norms due to still higher rates. -
Long Term Care Earnings
Q: Should we expect higher Long Term Care earnings?
A: They anticipate continued growth and profitability in Long Term Care. Recent benefits arose from favorable claims and additional premium rate increases, generating $61 million as a positive element entering 2024. While they can't provide exact numbers, the trajectory is positive. -
AI and Expense Efficiencies
Q: How is AI contributing to expense efficiencies?
A: They've been deploying intelligent automation and robotics, with plans to expand AI usage. While significant efficiencies from generative AI are yet to materialize, they're applying it to enhance advisor productivity, client interactions, and research capabilities. Operating in a regulated environment requires careful implementation, but they expect AI to contribute more to efficiencies over time.