Ameriprise Earnings: Wealth Management Segment Leading to Stronger Performance Than Peers

Ameriprise AMP reported net income of $890 million, or $8.21 per diluted share, on $3.9 billion of net revenue for the second quarter of 2023. On a company-provided adjusted operating basis (which excludes the effect of changes in interest rates on some of its products), the company reported pro forma operating earnings per share of $7.44, up 30% from the previous year. Adjusted operating return on equity (excluding accumulated other comprehensive income) was a strong 50.9% for the quarter.

We don’t anticipate making a material change to our $358 per share fair value estimate for narrow-moat-rated Ameriprise and assess shares as being fairly valued right now.

Ameriprise is doing better than many peers due to the strength of its wealth management segment. Adjusted net revenue for the wealth management business increased 14% from a year ago to $2.3 billion, with adjusted pretax operating earnings increasing 49% to $731 million year over year. Wealth management assets were up 13% to $833 billion and net investment income after deposit interest expense increased about 200% to $352 million year over year. While many wealth management firms and banks have been experiencing declines in their net interest income the past couple of quarters, Ameriprise’s wealth management segment increased its net investment income after interest expenses 15% from the previous quarter, which was more than we were expecting.

Asset management net revenue was 8% lower, though, than a year ago and just 1% higher sequentially, with pretax adjusted operating earnings down 27% from a year ago and down 2% sequentially. Results have been comparable with peers and earnings should recover as equity and fixed-income markets improve. The company’s retirement and protection solutions segment’s pretax adjusted earnings of $189 million was roughly in line with management’s general guidance of $200 million for the quarter.