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Insignia reports 6.9% FUA lift in 1H24

By Keith Ford
3 minute read

The firm has unveiled its results for the first half of the 2023–24 financial year.

Insignia Financial reported an increase in funds under management and administration (FUMA) of $15.5 billion to $300.6 billion for the first half of FY2024.

The firm reported underlying net profit after tax (UNPAT) of $95.5 million, representing a 1.2 per cent increase in 1H23.

NPAT in 1H24 was a loss of $49.9 million (compared with a $45.1million profit in 1HFY23), which Insignia said was the result of expenditure on “strategic initiatives and remediation”.

Moreover, overall FUMA was made up of funds under administration (FUA) of $215.1 billion, up 6.9 per cent on the half, while FUM increased 2 per cent to $85.5 billion driven by market performance offsetting unfavourable net flows and the divestment of the IOOF investment bond business.

According to the firm, its asset management business continues to deliver strong investment performance to clients and members, with 89 per cent of FUM outperforming target or benchmark.

Insignia also confirmed outflows of $1.8 billion, driven by institutional client rebalancing in the Antares fixed income and Intermede global equities direct capabilities.

“We are pleased to deliver a solid half-year result, as we continue to execute on our strategic priorities,” said outgoing chief executive Renato Mota.

Wealth management

The advice segment posted an EBITDA of $3.7 million in the half, while UNPAT improved by $21.2 million to a $0.7 million loss.

Revenue increased 3.8 per cent to $107.6 million, which the firm said was driven by higher ongoing client fees from repricing in Shadforth and Bridges, partly offset by cessation of third-party income.

Following the sale of Millennium3, closure of Lonsdale licence, and “right sizing” of Bridges, adviser numbers declined during the period to 1,199, a reduction of 326 advisers (-21.4 per cent) on pcp.

In February 2024, Insignia Financial also executed a sale agreement with Practice Development Group to return ownership of Godfrey Pembroke (GPG) to advisers under an existing arrangement from when Insignia Financial acquired the GPG business. GPG contributed revenue of approximately $1.8 million in FY23.

Insignia added that its advice business is on track to achieve the $10 million UNPAT target on a run-rate basis from the end of FY24.

“Following the acquisitions of ANZ’s pensions and investments business in 2020 and MLC in 2021, Insignia Financial is now one of Australia’s leading wealth managers. These acquisitions have played a key role in transforming the business and establishing a foundation for sustained growth,” Mr Mota said.

“We have a diversified business model with a unique combination of capabilities delivering scale and value.”

The firm declared an interim dividend of 9.3 cents per share, unfranked, to be paid on 3 April 2024. The dividend represents a payout ratio of 65 per cent of 1H24 UNPAT. Insignia added that dividends are expected to remain unfranked over FY24 and FY25.

“Through disciplined execution we have delivered synergy benefits, integrated and simplified our product and operating structure, and enhanced our offering to clients, members, and advisers. The current period profit result reflects significant investments in future growth and our desire to complete the remediation programs,” Mr Mota said.

“It’s pleasing to see strong early progress against our FY24–26 strategic initiatives as we strengthen our foundation for growth and deliver the benefits of scale to our members, clients, and shareholders.”

Remediation provisions of $72.6 million were raised during the period, with required net funding from corporate cash and debt reduced to $24.8 million after tax and trustee approved funding.

Looking ahead, Mr Mota said that Insignia has built momentum that “positions the business for sustainable future growth”.

“We have built a scalable and efficient business and improved client outcomes. With Australia’s growing pool of superannuation and demographic trends, Insignia Financial is well placed to support Australians with their financial wellbeing into the future,” Mr Mota said.