Challenger FY26 Normalised NPAT $468m, Ordinary DPS Up 7%

Challenger (ASX:CGF) reported FY26 normalised net profit after tax of $468 million, up 3%, and normalised earnings per share of 68.1 cents, up 3% and within the updated full-year guidance range of 66 to 70 cents per share set on 21 April 2026. Challenger states that its normalised profit figures are non-statutory amounts that exclude asset and liability experience and significant items. Statutory net profit after tax was $506 million, against $192 million in FY25, which Challenger said was supported by the higher normalised NPAT and positive asset and liability experience. Normalised return on equity post-tax was 11.6%, above the FY26 target of 10.9% and against 11.8% in FY25. Total Life sales increased 12% to $9.6 billion, with annuity sales up 19% to $6.2 billion, annuity book growth of 10.7% and total Life book growth of 9.2%. Life normalised NPAT increased 2% to $471 million as average investment assets grew 6% to $26.2 billion, while the normalised cash operating earnings margin decreased 13 basis points to 3.06%, which Challenger said primarily reflected lower yields on fixed income securities due to the tight credit spread environment, partially offset by the seasonality of other distributions including a higher allocation to absolute return funds. Funds Management normalised NPAT increased 1% to $53 million and total group assets under management were $120.0 billion, down 3%.

The Board determined a fully franked full-year ordinary dividend of 31.5 cents per share, an increase of 7%, and a fully franked special dividend of 1.5 cents per share. Challenger upsized its on-market share buy-back to $450 million, comprising the $150 million program announced in February 2026, of which approximately $90 million has been completed to date, and a further $300 million announced today, subject to market conditions and regulatory approval. Challenger Life Company's prescribed capital amount ratio was 1.38 times the minimum regulatory requirement at 30 June 2026, or 1.50 times on a pro forma basis under APRA's new capital standards for longevity products that took effect on 1 July 2026, with $1.1 billion of capital in excess of APRA's minimum requirement. From FY27 Challenger will report under a new group reporting framework, and its FY27 guidance for core basic earnings per share is a range of 45 to 49 cents per share; the mid-point of 47 cents is 6% higher than FY26 core EPS of 44.2 cents per share on that same basis. Challenger also announced the proposed merger of its multi-affiliate funds management business Fidante with Channel Capital, which is subject to regulatory approval and expected to complete in the first half of FY27, at which point Challenger will own 45% of the merged entity.