Ameriprise enjoys uptick in retail activity

The company is rumored to be among potential bidders for an investment arm of Lloyds Banking Group.

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« Our business generates strong free cash flow that we’re returning to shareholders through share repurchases and dividends. » Ameriprise CEO Jim Cracchiolo

A surge in retail activity and improved stock market returns helped Ameriprise Financial Inc. top Wall Street estimates in the first quarter.

The Minneapolis-based retail financial services company reported operating profits of $338 million, or $1.59 per share, in the first quarter. That was up about 1 percent from a year ago and beat Wall Street estimates by about a penny. Net income was $335 million, or $1.58 a share.

Operating net revenue rose more than 4 percent to $2.6 billion.

The company’s key growth engines — advice and wealth management, and asset management — both reported double-digit increases in operating pretax income. The company’s advice and wealth management operation, home of the company’s well-known army of financial planners and advisers, saw operating pretax profits jump nearly 40 percent from a year ago to $131 million.

Its asset management unit, which includes the Columbia and Threadneedle brands, saw operating pretax profits grow 10 percent despite the fact that it continues to struggle with net asset outflows from the two lines.

Reflecting a long-running industrywide turn away from equities, investors continue to pull out more than they put into the funds, and the segment had total net outflows of $5.7 billion in the first quarter. The outflows were largely from institutional portfolios, the company said, and related to legacy relationships that both Columbia and Threadneedle have.

“Our business generates strong free cash flow that we’re returning to shareholders through share repurchases and dividends,” said CEO Jim Cracchiolo in a news release. “In fact, we’re increasing our regular quarterly dividend, raising it another 16 percent.”

The company declined to address news reports in the United Kingdom that it is considering a $1.2 billion bid for Scottish Widows Investment Partnership, the Edinburgh-based investment arm of Lloyds Banking Group. According to the reports, Lloyds Banking Group, which is under regulatory pressure to build its capital cushion, has hired Deutsche Bank to advise on options.

Analysts are likely to quiz Ameriprise executives about the market speculation in Tuesday morning’s earnings conference call.

Ameriprise was rumored last fall to have been in advanced talks to buy much of ING Group’s Asian management operations, but that didn’t materialize.

Ameriprise has clear international ambitions and is sitting on $2 billion in deployable capital. It already owns Threadneedle Asset Management, its London-based international asset management arm.

 

Jennifer Bjorhus • 612-673-4683

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