The investment management group has downplayed its profit expectations ahead of reporting season but says it is “continuing to build on strong foundations” to diversify its product set.
In a statement following the company’s investor day on Thursday, Challenger chief executive Richard Howes said normalised net profits for the 2021 financial year were expected to be at the bottom end of the guidance rate of between $390 million and $440 million.
However profits for the 2022 year were expected to bounce back to between $430 million and $480 million, with the group having “emerged from a significant period of disruption in a strong position to drive its next phase of growth”.
“Over the past three years we’ve faced a confluence of disruptive external events and have emerged in strong shape, with a significant capital buffer, a market leading funds management offering and diversified revenue flows in our life business,” Mr Howes said.
“We are now continuing to build on our strong foundations to capture the opportunities the high growth retirement market presents.”
Mr Howes said the group’s acquisition of MyLife MyFinance bank earlier in the year would help Challenger build direct relationships with customers and expand its product offering.
“As the clear leader in retirement income, Challenger has a real opportunity to play a more meaningful role in the lives of our customers,” he said.
“Through our complementary businesses, including the bank, we will be able to provide Australian retirees with a range of products that support their financial security for a better retirement.”
Mr Howes flagged the group was increasing its capital reserves to 1.6 times the APRA prescribed amount in order to “support our long-term growth and success”, while targeting a pre-tax return on equity of 12 per cent above the RBA cash rate.
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