Ameriprise Financial Inc.
) third quarter 2012 operating earnings of $1.32 per share
marginally beat the Zacks Consensus Estimate of $1.29. This was
also favorable compared with the year-ago earnings of $1.19.
Better-than-expected results were primarily driven by improved
top line and a slight drop in operating expenses. Moreover,
assets under management and administration showed a marked
improvement in the quarter. Also, the company's ongoing capital
deployment activities are impressive.
After taking into consideration net realized gains or losses,
integration and restructuring charges, market impact on variable
annuity guaranteed living benefits, amortization of deferred
acquisition costs (DAC) and deferred sales inducement costs
(DSIC) as well as income or loss from discontinued operations,
Ameriprise's net income from continuing operations came in at
$174 million or 79 cents per share. This compares with net income
of $322 million or $1.33 per share in the year-ago quarter.
Performance in Detail
On an operating basis, total net revenues surged 2.9% year over
year to $2.56 billion. The rise was primarily driven by strong
advisor client net inflows and market appreciation, partially
offset by a decline in net investment income as well as outflows
in asset management. Moreover, total net revenues were slightly
above the Zacks Consensus Estimate of $2.55 billion.
Operating expenses came in at $2.12 billion, marginally dipping
0.4% from $2.13 billion in the year-ago quarter. The fall
reflects lower DAC amortization, almost offset by higher
Total assets under management and administration were $678
billion, up 13% on a year-over year basis. The increase was
mainly due to market appreciation.
Share Repurchase Update
During the third quarter, Ameriprise bought back 6.3 million
shares of its common stock for $340 million. The company has $482
million remaining under its present share repurchase
authorization. Additionally, the management has authorized a new
$2 billion share buyback program through 2014.
Concurrent with the earnings release, Ameriprise announced a 29%
hike in its quarterly cash dividend to 45 cents per share. The
dividend is payable on November 16 to the shareholders of record
as of November 5.
This is the second dividend increase this year. Earlier in April,
Ameriprise had announced a 25% rise in quarterly dividend.
) third quarter 2012 adjusted earnings substantially beat the
Zacks Consensus Estimate. The improvement in results was
primarily attributable to enhanced top line and lower operating
expenses. Moreover, augmented assets under management were the
Ameriprise's consistent capital deployment activities continue to
boost investors' confidence. Moreover, the company's prudent
expense management and robust balance sheet are among the
positives. Further, improvement in retail client activity is
expected to fuel the operating leverage in the upcoming quarters.
Nevertheless, the prevailing low interest rate environment and
stringent regulatory landscape will keep the company's financials
slightly strained in the near term.
Ameriprise currently retains a Zacks # 3 Rank, which translates
into a short-term Hold rating. Also, considering the
fundamentals, we maintain a long term 'Neutral' recommendation on
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