Ameriprise Beats on Q3 Earnings, Revs in Line

Zacks

Ameriprise Financial Inc. (AMP) reported third-quarter 2013 operating earnings per share of $1.91, outpacing the Zacks Consensus Estimate of $1.73. Moreover, results improved 45% from $1.32 earned in the year-ago quarter.

Better-than-expected results were mainly attributable to rise in revenues, partially offset by higher expenses. Further, assets under management (:AUM) and assets under administration showed improvement. The company’s capital deployment activities were impressive as well.

After taking into consideration integration and restructuring charges, market impact on index universal life benefits and net realized gains/losses, Ameriprise’s net income from continuing operations came in at $381 million or $1.86 per share. This was above net income of $174 million or 79 cents per share in the year-ago quarter.

Quarterly Highlights

On an operating basis, net revenue climbed 7% year over year to $2.7 billion. The rise was largely driven by strong client net inflows, increase in client activity and market appreciation. Net revenue was in line with the Zacks Consensus Estimate.

Operating expenses came in at $2.1 billion, up 1% from the year-ago quarter. The increase primarily resulted from rise in benefits, claims, losses and settlement expenses as well as general and administrative expense, partly offset by lower distribution costs.

Total AUM and assets under administration were $735 million, rising 8% year over year. The increase was mainly due to market appreciation and advisor client net inflows.

Capital Deployment Activities

In the reported quarter, Ameriprise repurchased 4.2 million shares for $370 million.

Along with the earnings release, Ameriprise announced a regular quarterly cash dividend of 52 cents per share. The dividend will be paid on Nov 22 to shareholders of record as of Nov 12.

Notably, in the said quarter, the company returned $475 million to its shareholders through share repurchases and dividends.

Other Company Releases

BlackRock, Inc.’s (BLK) third-quarter 2013 adjusted earnings were in line with the Zacks Consensus Estimate. Results on a year-over-year basis benefited from a rise in revenues, partly offset by higher operating expenses.

The Blackstone Group L.P.’s (BX) third-quarter 2013 economic net income marginally missed the Zacks Consensus Estimate. Lower-than-expected results were due to a fall in the top line, partially offset by lower expenses.

Among other asset managers, Invesco Ltd. (IVZ) is scheduled to report its third-quarter earnings on Oct 31. The company currently has a Zacks Rank #2 (Buy) and an Earnings ESP of +1.92%. Hence, it has the right combination to post an earnings beat this quarter.

Our Viewpoint

Ameriprise’s consistent capital deployment activities continue to boost investors’ confidence. Moreover, the company’s prudent expense management and strong balance sheet will expectedly drive bottom-line improvement, going forward. However, the prevalent low interest-rate environment coupled with stringent regulations is anticipated to keep the company’s financials under pressure.

At present, Ameriprise holds a Zacks Rank #3 (Hold).

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