Despite recording its highest retail annuity sales Challenger has reported a drop in its net profit after tax (NPAT) for the half-year to 31 December 2014.
In a statement to the ASX, the annuity provider said its normalised NPAT was $154.9 million for the period, down 5.3 per cent.
Challenger explained the previous period benefited from a $15 million tax expense due to a “taxation on financial arrangement” which concluded on 30 June 2014.
Had the benefit not been in place, Challenger pointed out its normalised NPAT would have increased by 4.3 per cent.
Challenger also reported a total of $57.2 billion in assets under management across life and funds management, up 17 per cent than 12 months prior.
“Pre-tax earnings continue to grow at a pleasing rate despite a backdrop of market volatility and a declining risk-free rate,” Challenger chief executive Brian Benari said.
“Fortunately, the uncertain market environment has also been a driver of strong fixed income fund flows and record retail annuity sales, with retirees valuing the attractive risk-adjusted returns of capital-backed, guaranteed annuities,” he said.
The annuity provider also reported total net flows for its funds management businesses was $6.8 billion, up from $1.1 billion in the previous corresponding period.
“Average funds under management rose 22 per cent to $52.6 billion, resulting in EBIT of $21 million and delivering a pre-tax ROE of 32.5 per cent, up from 31.3 per cent a year earlier,” a statement from Challenger said.
“Within the Fidante Partners boutique funds division, FUM rose 18 per cent with organic net flows of $1.6 billion due to strong performances by its fixed income managers.”
“First flows were also recorded for smart beta boutique Tempo Asset Management, established in 2014 to implement innovative active investment strategies which aim to outperform global equities indices,” the statement said.
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