DOW JONES NEWSWIRES
Ameriprise Financial Inc. (AMP) swung to a third-quarter profit
as the provider of financial planning services posted sharply
higher revenue and net investment income.
Earnings topped Wall Street estimates, although revenue fell
short.
"The fundamentals of our business are improving slowly but
steadily, with new client growth and improved asset levels and
product flows," Chief Executive Jim Cracchiolo said. "This
increasing business momentum, along with our continued focus on
delivering re-engineering savings to the bottom line, provides
important earnings leverage for the future."
Ameriprise is poised to become the eighth-largest U.S. manager
of long-term mutual funds - with nearly $400 billion in global
assets under management - once it closes its purchase of the stock
and bond mutual-fund business of Bank of America Corp.'s (BAC)
Columbia Management unit in the spring.
The deal, worth about $1 billion, could transform Ameriprise, a
former unit of American Express Co. (AXP), by expanding its
relatively stable revenue from asset management, and giving its
brokers access to some high-net-worth clients of Columbia.
Cracchiolo said when the deal was announced last month that
Columbia will increase Ameriprise's earning modestly in the first
year, and more so in the second year. He also expects margins to
improve 25% by 2012.
For the third quarter, Ameriprise reported a profit of $260
million, or $1 a share, compared with a year-earlier loss of $70
million, or 32 cents a share.
Core operating earnings, which exclude losses from the
credit-market dislocation, fell to $1.03 a share from $1.13, hurt
by lower equity markets and the cost of maintaining high liquidity
levels.
Total revenue increased 19% to $1.98 billion, helped by growth
in net investment income, which jumped to $542 million from $62
million.
Analysts polled by Thomson Reuters expected earnings of 64 cents
a share on revenue of $2.09 billion.
Ameriprise ended the quarter with more than $2 billion in excess
capital. The debt-to-capital ratio was 18.7%.
Columbia's long-term asset-management business, which includes
the Columbia mutual funds and other private assets managed by
Columbia, had about $165 billion in equity and fixed-income assets
under management as of June 30. The stock-fund business, with
assets of $93 billion, includes Columbia and Wanger mutual
funds.
Shares rose 1.6% to $36.06 in after-hours trading and are up 52%
so far thus year through Wednesday's close.
-By Lauren Pollock, Dow Jones Newswires; 212-416-2356;
lauren.pollock@dowjones.com