Once a pillar of trust in Australia’s financial services landscape, AMP Limited (ASX: AMP) has seen its reputation — and stock price — battered over the past few years. From regulatory scandals to strategic missteps, the company has struggled to win back investor confidence. However, with the dust starting to settle, one big question arises: Is AMP now undervalued at current prices?

Let’s take a closer look at what’s changed, what’s improving, and why AMP may be entering a new phase — one where value investors might want to pay attention.

A Glance in the Rearview Mirror: AMP’s Troubled Past

AMP’s fall from grace is well documented. In 2018, it was one of the major casualties of Australia’s Royal Commission into misconduct in the banking, superannuation, and financial services industry. The revelations led to massive client remediation costs, executive resignations, and a sharp erosion of public trust.

As a result, AMP’s share price has declined by over 70% since its 2018 highs, leaving a trail of disillusioned investors in its wake. But past performance is not always indicative of future results — and that might be exactly where AMP’s opportunity lies.

What AMP Does Today – A More Focused Business

AMP has significantly simplified its business model. Today, the company operates across three core segments:

1. AMP Bank: A retail-focused bank providing home loans and deposit products.
2. Platforms: Delivering investment and superannuation solutions to Australians.
3. New Zealand Wealth Management: Financial advice and wealth services across the Tasman.

Importantly, AMP has exited its non-core and capital-intensive segments, such as AMP Capital and life insurance, which were previously weighing down overall performance.

Signs of a Turnaround – Restructuring That Matters

In recent years, AMP has taken meaningful steps to transform its operations and restore shareholder value:

Asset Sales: Strategic divestment of life insurance and infrastructure assets has helped de-risk the balance sheet.
Capital Returns: The company has completed a share buyback and capital return, signaling confidence in its future cash flows.
Leadership Overhaul: Under CEO Alexis George, the company is embracing cultural reform and refocusing on core competencies.

These aren’t just cosmetic changes — they’re starting to show up in the numbers.

Improved Financials: A Quiet but Real Comeback

In H2 FY24, AMP reported net income of $83 million, a stark reversal from a $34 million loss in the same period last year.

The current P/E ratio of 20.62 and P/B ratio of 1.01 indicate that the market is pricing AMP near its book value — despite improving profitability and a cleaner structure. The most recent dividend of $0.01 per share may be modest, but it reflects cautious optimism and financial discipline.

AMP Bank – The Underappreciated Engine

Although it lacks the scale of Australia’s “Big Four” banks, AMP Bank is quietly gaining ground:

Home loan book grew ~6% in FY24

Net Interest Margin (NIM) remains resilient, despite rising interest rates

Low delinquency rates show healthy credit quality

With rising housing demand and increased refinancing activity, AMP Bank could become a reliable contributor to overall group profitability.

So, Why Is the Market Still Skeptical?

Despite the recovery signs, AMP still trades as if it’s stuck in the past. Why?

1. Lingering distrust from past scandals
2. Pessimism around the wealth management industry
3. Slow pace of transformation
4. Limited analyst coverage and investor fatigue

Yet, this disconnect between perception and fundamentals is exactly what creates a potential value play.

What Could Drive a Re-rating? – The Upcoming Catalysts

Here are five key triggers that could boost AMP’s share price and shift market sentiment:

1. Further Cost Reductions – Already underway, efficiency gains will improve margins and ROE.
2. Improved Profitability from AMP Bank – Higher NIMs and loan book growth could surprise the market.
3. Capital Management – More buybacks or higher dividends could reward shareholders.
4. Regulatory Stability – With fewer legacy issues, AMP is better positioned to rebuild its brand.
5. Earnings Upside – Continued earnings beats could shift the narrative from recovery to growth.

Valuation: Undervalued or Simply Ignored?

AMP currently trades close to its book value, and its P/E ratio remains below many financial sector peers. When you factor in:

1. Streamlined business structure
2. Steady earnings recovery
3. Shareholder-friendly capital returns
4. Undervalued banking arm

It becomes harder to justify such a low valuation unless one believes AMP will stumble again — which current data doesn’t support.

Final Verdict: A Long-Term Opportunity?

AMP isn’t a momentum stock. It won’t double in a month, and there are no guarantees that its transformation will be flawless. But for patient investors, AMP offers a rare combination:

1. A business that’s improving
2. A stock that’s unloved
3. And a valuation that’s hard to ignore

The worst appears to be behind AMP. And while many investors remain focused on the past, those willing to look ahead may find an undervalued gem hiding in plain sight on the ASX.

Disclaimer:

General Financial Product Advice and Regulatory Framework: Pristine Gaze Pty Ltd (ABN 66 680 815 678, ACN 680 815 678) operates as Corporate Authorised Representative (CAR No. 001312049) of Alpha Securities Pty Ltd (AFSL 330757), which is licensed and regulated by the Australian Securities and Investments Commission under the Corporations Act 2001 (Cth). This report contains general financial product advice only and has been prepared without consideration of your personal objectives, financial situation, specific needs, circumstances, or investment experience. The information is not tailored to individual circumstances and may not be suitable for your particular situation. Before acting on any information contained herein, you should carefully consider its appropriateness having regard to your personal objectives, financial situation, and needs, and consider seeking personal financial advice from a qualified financial adviser who can assess your individual circumstances and provide tailored recommendations.

Investment Risks and Market Warnings: All investments carry significant risk, and different investment strategies may carry varying levels of risk exposure including total loss of invested capital. The value of investments and income derived from them can fluctuate significantly due to market conditions, economic factors, company-specific events, regulatory changes, commodity price volatility, currency fluctuations, interest rate movements, and other factors beyond our control. Securities markets are subject to market risk from general economic conditions and investor sentiment, liquidity risk affecting the ability to buy or sell securities at desired prices, credit risk from issuer default or deterioration, operational risk from inadequate internal processes, sector-specific risks including industry regulatory changes, technology obsolescence, management changes, competitive pressures, supply chain disruptions, and mining-specific risks including resource estimation uncertainty, operational hazards, environmental compliance, permitting delays, commodity price cycles, geopolitical factors affecting mining operations, and exploration risks. Small-cap and speculative mining stocks carry additional risks including limited liquidity, higher volatility, dependence on key personnel, limited operating history, uncertain cash flows, and potential failure to achieve commercial production.

Information Accuracy and Limitations: While we endeavour to ensure information accuracy and reliability, we make no representations or warranties (express or implied) regarding the accuracy, reliability, completeness, timeliness, or suitability of information provided, except where liability cannot be excluded under applicable law. This report may include information from third-party sources including company announcements, regulatory filings, research reports, market data providers, financial news services, and publicly available information, which we do not independently verify and for which we assume no responsibility. Past performance, examples, historical data, or projections are not indicative of future results, and no guarantee of future returns is provided or implied. To the maximum extent permitted by law, Pristine Gaze Pty Ltd and Alpha Securities Pty Ltd, together with their respective directors, officers, employees, representatives, and related entities, exclude all liability for any errors, omissions, inaccuracies, loss or damage (including direct, indirect, consequential, or special damages) arising from reliance on information provided, investment decisions made based on this report, market losses, opportunity costs, and technical issues or system failures.