Sydney-based investment manager, Challenger (ASX:CGF) produced a mixed earnings result for 2023-24, as assets under management (AUM) grew 21% but statutory net profit fell from the previous year.
Challenger said it lifted assets under management to $127.1 billion, from $105 billion a year earlier, while its ‘normalised’ net profit before tax (NPBT) rose 17% to $608 million, just beating the top end of higher guidance of between $555 million and $605 million.
The full-year dividend was unchanged at 26.5 cents per share.
However, statutory net profit fell 24% year on year from $171 million to $130 million, while analysts had forecast a rise to $213.6 million.
The company said this was due to the unrealised impact of lower commercial property valuations and changes to UK mortality rate assumptions (there were 2% more deaths than forecast in England in 2023).
Challenger said it would be targeting normalised net profit before tax guidance of between $440 million and $480 million in 2024-25, with the midpoint representing a 10% increase on FY24. This equates to a normalised NPBT guidance range of between $640 million and $700 million.
It said its NPBT result was driven by an ongoing strong performance in its life insurance unit and a disciplined approach to cost management.
Asset growth was driven by life insurance book growth and strong fund management net inflows, the company said.
CEO Nick Hamilton said in the statement that the company’s life business “performed exceptionally well and demonstrates our expertise in providing guaranteed income to more Australians, with longer tenor terms and lifetime annuity sales contributing to life sales of $9.1 billion”.
“Funds management also expanded its offering and capability, launching new investment strategies across Fidante, as well as driving private credit origination in Challenger Investment Management to meet growing demand for higher-yielding income strategies,” he said.
Despite the weaker statutory result, the shares were up more than 6% in late morning trading.