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Challenger posts strong earnings despite mark-to-market loss

Staff Reporter 2 minute read

Challenger Financial’s solid mortgage management and life division have helped offset an otherwise tough year for the ASX listed group.

Released to the market yesterday, Challenger’s first half results included a statutory loss of $108 million, which it accredited to the decline in the value of its investments as a result of the global financial crisis.

The company’s normalised net profit however, which excludes mark-to-market movements, was $106 million, up 4 per cent on the previous corresponding period.

Speaking with Mortgage Business, Challenger’s head of corporate marketing and communications Stuart Barton emphasised that the mark-to-market result did not impact the group’s strong position.

“With the global financial crisis, the drop in our investment values was not unexpected.

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“The important thing is that we have maintained our dividend – which wouldn’t be possible if you were running a loss. We are actually running a strong operating profit.”

Mr Barton also emphasised that the group’s mortgage business had out-performed market expectations over the six month period ending December 2008.

Over that time, Challenger’s earnings before interest and tax (EBIT) for its mortgage business rose 21 per cent.

“We are very pleased with this result, which was above market consensus. With securitisation markets effectively closed, the investment community had not expected such a strong result,” Mr Barton said.

He added that Challenger’s investment in the broker network, by way of its acquisitions of Choice and PLAN and investment in FAST, had also strengthened the business by providing alternative and more diverse income streams.

On the back of its earnings statement Challenger’s share price yesterday jumped 5.94% to close at $1.07.

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