Ameriprise Financial Reports Fourth Quarter and Full Year 2017 Results
One-time negative impact of the Tax Cuts and Jobs Act (“Tax Act”) in the quarter of $2.08 per diluted share
Fourth quarter 2017 net income per diluted share excluding the impact from the Tax Act was $3.26; Operating EPS excluding the impact from the Tax Act was $3.26, up 19 percent
Full year 2017 net income per diluted share excluding the impact from the Tax Act was $11.49; Operating EPS excluding the impact from the Tax Act was $12.27, up 45 percent
Excluding the impact of the Tax Act, fourth quarter 2017 operating earnings increased 13 percent to $502 million, with operating earnings per share up 19 percent to $3.26.
Fourth quarter 2017 return on equity excluding AOCI was 24.8 percent and operating ROE excluding AOCI was 26.9 percent. Excluding the impact of the Tax Act, operating ROE excluding AOCI was 32.3 percent compared to 22.2 percent in the prior year.
Full year 2017 net income per diluted share was $9.44 and operating earnings per diluted share was $10.23. Excluding the impact of the Tax Act, operating earnings per diluted share was $12.27, up 45 percent compared to 2016.
“Ameriprise had an excellent fourth quarter and a strong 2017 as we served more clients and experienced good asset growth across the firm,” said Jim Cracchiolo, chairman and chief executive officer. “We’re well positioned to build on our momentum and further differentiate Ameriprise as a financial services leader.”
“Our strong growth, driven by our wealth management business, reflects the value of the advice and solutions we provide, and we are increasingly being recognized for high client satisfaction, loyalty, trust and forgiveness.
“The lower corporate tax rate will increase cash flow generation, providing additional flexibility to invest for business growth and to generate a differentiated capital return to shareholders. While our fourth quarter earnings were negatively impacted, we expect the ongoing benefits from tax reform will more than offset the one-time accounting impacts in short order.”
GAAP Results – Fourth quarter
Net revenues were $3.2 billion driven by strong growth in Advice & Wealth Management that was partially offset by the impact of 12b-1 fee changes.
Expenses of $2.6 billion decreased 1 percent, or $33 million, from a year ago.
Operating Results – Fourth quarter
Operating net revenue increased 10 percent to $3.2 billion after normalizing for the net impacts of 12b-1 fees and the one-time impact of the Tax Act. Advice & Wealth Management net revenues increased 17 percent driven by growth in client assets after normalizing for the net impacts of 12b-1 fees.
Operating expenses of $2.5 billion increased 4 percent from a year ago. General and administrative expenses increased 6 percent reflecting the timing of accruals and payments for performance-related compensation, as well as foreign exchange translation. Adjusting for these items, underlying general and administrative expenses remained well managed and were essentially flat.
The fourth quarter 2017 operating effective tax rate included a $320 million impact primarily from the remeasurement of net deferred tax assets using the lowered corporate tax rate, repatriation tax and lower future tax benefits from low income housing assets. This was a one-time, primarily non-cash, accounting adjustment. Excluding these impacts, the operating effective tax rate was 23.0 percent. Taxes in the current quarter also reflect the adoption of stock compensation accounting guidance in the first quarter of 2017, which had a favorable $13 million impact in the quarter and reduced the tax rate by 2 percentage points.
The company estimates that its ongoing effective tax rate will be in the 17 to 19 percent range over the near term. The lower corporate tax rate will have an ongoing benefit to earnings and the company expects to earn back the initial charge within two years.
The full press release is available for download below. Earnings materials are also available on the Investor Relations site at ir.ameriprise.com.