Challenger (CGF) H2 2024 earnings summary

Executive summary

• Achieved strong FY 2024 financial performance, with normalised net profit before tax up 17% to $608 million, exceeding guidance and reflecting a strategic focus on longer-duration, high-quality Life sales and cost discipline.

• Completed the sale of the bank, simplifying the business and enhancing capital flexibility to focus on core Life and Funds Management segments.

• Expanded partnerships with superannuation funds, wealth platforms, and reinsurance providers, and launched new brand and marketing strategies.

• Invested in technology, including a partnership with Accenture, to support scalable growth and operational efficiency.

• Business model is more resilient, less capital intensive, and strongly capitalised, supporting sustainable long-term growth.

Financial highlights

• Group normalised net profit before tax rose 17% to $608 million, above guidance.

• Normalised net profit after tax increased 14% to $417 million; statutory net profit after tax fell 24% to $130 million due to non-cash property revaluations and accounting changes.

• Assets under management grew 21% to $127 billion.

• Life sales totaled $9.1 billion, with lifetime annuity sales up 110% to $1.5 billion; annuity book growth at 5.5%.

• Fully franked full-year dividend of 26.5 cents per share, up 10%, with a payout ratio of 43%-44%.

Outlook and guidance

• FY 2025 normalised net profit after tax guidance is $440–$480 million, with the midpoint representing 10% growth.

• FY 2025 normalised NPBT guidance is $640–$700 million, midpoint 10% higher than FY24.

• Cost to income ratio target lowered to 32%-34% for FY 2025.

• Continued focus on capital strength, with PCA ratio to remain in 1.3x–1.7x range.

• Normalised ROE target is RBA cash rate plus 12%, currently ~11.2% post-tax.