Ameriprise Reports 11% Increase in Net Income and 5% Growth in Net Revenues
Ameriprise Financial Inc. (NYSE: AMP), one of the nation’s largest independent broker-dealers, reported its financial results for the first quarter 2017.
• Net income totaled $403 million, up 11 percent compared to a year ago, or $2.52 per diluted share, up 21 percent.
• Operating earnings totaled $432 million, up 14 percent compared to a year ago, with operating earnings per diluted share of $2.70, up 24 percent.
• Net revenues of $2.9 billion increased 5 percent, or $136 million, from a year ago.
• Expenses of $2.4 billion increased 6 percent compared to last year.
• Operating net revenues of $2.9 billion increased 3 percent, or $72 million, compared to a year ago.
• Operating expenses of $2.3 billion increased 2 percent.
• General and administrative expense increased 3 percent to $752 million compared to the first quarter of 2016 when they totaled $727 million. The company said this was due to the impacts of elevated DOL transition expenses, a renegotiated vendor arrangement and the beneficial impact of foreign exchange translation.
“Over the past year, the regulatory developments absorbed significant management resources and advisor attention as we worked with our advisors to understand potential changes for the industry and Ameriprise related to the DOL fiduciary rule,” said Jim Cracchiolo, chairman and CEO on the company’s earnings call. “In addition, we began implementing certain changes that are aligned with where the industry is headed – for example our transition to advisory shares without 12b-1 fees — and things are going well. We continue to manage this period of change and are starting to turn our focus more to growth.”
He added, “We’re experiencing strong growth in our fee-based business that reflects industry trends to fee-based relationships. Our investment advisory platform is one of the largest in the industry and growing as a larger part of the business as we see a continued shift to fee-based. In fact, net inflows in wrap more than doubled to nearly $4 billion.”
First Quarter 2017 Highlights
• Total assets under management and administration increased 6 percent to $818 billion as Ameriprise advisor client net inflows and market appreciation more than offset asset management net outflows and the unfavorable impact of foreign exchange rates, the company said.
• Excess capital was nearly $2.0 billion at the end of the quarter after the company repurchased 2.9 million shares of common stock for $357 million and paid $121 million in quarterly dividends.
• The company increased its regular quarterly dividend 11 percent to $0.83 per share payable on May 19, 2017 to shareholders of record as of May 8, 2017. In addition, the board approved an additional $2.5 billion share repurchase authorization that expires on June 30, 2019.
• Advice & Wealth Management advisor client assets increased to a record $0.5 trillion, which the company noted reflected the continued strength in fee-based investment advisory (wrap) net inflows, with net inflows of $3.9 billion in the quarter bringing platform AUM to $213 billion.
• Advice & Wealth Management continued to improve profitability, with pretax operating margin reaching 19.2 percent in the quarter, up from 17.1 percent a year ago.
• Total branded advisors were 9,668 during the first quarter of 2017 compared to 9,766 one year ago.
• 98 advisors joined the firm during the first quarter.
• Operating net revenue per advisor was $529,000 on a trailing 12-month basis. During the quarter, the company completed its transition to share classes without 12b-1 fees in advisory accounts.
• Operating net revenue per advisor on a quarterly basis increased 9 percent, and adjusting for the change in 12b-1 fees in both periods, operating net revenue per advisor increased 13 percent.
As reported by the DI Wire last month, Ameriprise will acquire Investment Professionals, an independent broker-dealer with 200 advisors and $8 billion in assets. The acquisition is expected to close in the third quarter of 2017.
Ameriprise Financial oversees a nationwide network of approximately 10,000 financial advisors and has $818 billion in assets under management.
