Last week the government passed in the Senate the ‘Protecting Your Super Package’ which it claimed would reunite three million Australians with their super.
The legislation still must pass the lower house before it becomes law and as such could potentially be further amended.
However, AMP has already done an assessment on the impact of the bill as it stands and claims that its earnings impact would be approximately $10 million in the 2019 financial year.
From 2020 though there would be an annualised impact of up to $30 million after tax, with most of the impact to be felt by wealth management businesses.
This will be due to the requirement under legislation to transfer approximately 370,000 low-balance super accounts to the ATO.
AMP said the figures are estimates that could change due to a variety of factors including offsetting actions to retain customers and revenue, administrative costs and the consolidation of low balance super accounts from other industry participants into AMP accounts.
AMP said the impact on AMP capital is not material, but the news comes as investment analyst Morningstar said AMP was set to face a rough few years.
Morningstar released an updated outlook on AMP and said that, despite a strong market position, the company was set to face several difficult years ahead.
“Despite AMP’s strong market positions in a long-term growth industry, the very damaging royal commission revelations have been an unprecedented disaster. AMP’s heritage brand has been trashed and its long-term strategy is now uncertain,” said Morningstar analyst Chanaka Gunasekera.
Mr Gunasekera said Morningstar had reduced their fair value estimate from $2.60 to $2.40, which could lower if revelations from the royal commission go to court.
“The royal commission’s final report identified a number of instances where AMP and its leaders may have broken civil and criminal laws, and we believe there is a high likelihood that further court actions will be taken against it,” he said.
Moving ahead it was AMP Capital that was expected to be the earnings growth driver for the company as the bank loses its momentum, said Mr Gunasekera.
“AMP Bank relies on the mortgage broker channel along with its financial advisers to originate its banking products. Both these distributional channels will be disrupted in the near term.
“We expect AMP Capital to continue to be the earnings growth driver of its retained businesses,” he said.
