Challenger’s FY19 results hit by disruption

Challenger has reported a lower statutory net profit after tax which fell by $15 million to $308 million in FY19 due to the significant disruption in the advice industry.

“Group performance was impacted by the challenging operating environment driven by the disruption in the financial advice industry, with key metrics below expectations set at the beginning of the financial year,” the group said in a press release.

Following this, the company also reported a drop of $10 million in normalised net profit after tax (NPAT) to $396 million.

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At the same time, group assets under management (AUM) were up slightly on FY18 finishing the year at $82 billion. The slower growth was due both to industry disruption and redemption by a major superannuation fund predominantly driven by internationalisation of their investment management.

“Challenger has continued to attract solid retail inflows in both funds management and life, despite retail flows across the sector hitting record lows last year. In our life business, domestic sales were marginally down, with lower sales from major hubs offset by stronger sales by independent financial advisers,” Challenger’s managing director and chief executive, Richard Howe.

“In funds management, when removing the impact of performance fees, we saw solid growth in underlying earnings before interest and tax of 23 per cent.”

Challenger’s funds management business saw strong underlying earnings offset by lower performance fees, which were down $16 million to $3 million.  Subsequently, net income for the year was down $1 million to $150 million, but up $14 million excluding performance fees.


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