IOOF’s AGM revealed the fund manager will put away a mere $10m in estimated remediation cost in the wake of the RC. No systemic issues were uncovered other than some fees-for-no-service. The broker thinks the market will find this hard to believe given the extent of other remediation provisions announced to date.
The risks of other possible ramifications, such as a ban on vertical integration, seem low, but the broker still assumes some changes to its platform will be needed post-RC. IOOF is optimistic about being able to complete its ANZ wealth management acquisition by March. The broker sees risks as priced in and retains Buy and an $8.65 target.
Sector: Diversified Financials.
Target price is $8.65.Current Price is $7.06. Difference: $1.59 – (brackets indicate current price is over target). If IFL meets the Citi target it will return approximately 18% (excluding dividends, fees and charges – negative figures indicate an expected loss).