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Insignia Financial regains shareholder trust after axing dividend
The diversified financial services group, Insignia Financial (ASX:IFL), has posted a solid quarterly performance to September 30, with total funds under management and administration (FUMA) rising by $8.3 billion, or 2.7 per cent, to $319.6 billion.
The increase was largely driven by favourable market conditions, helping offset net outflows of $1 billion, mostly from institutional clients.
It follows the full-year result to June 30, 2024, that saw an underlying net profit after tax from continuing operations of $216.6 million, up 13.6 per cent on the previous corresponding period, but a statutory net loss after tax of $185.3 million due to increased remediation provisions and transformation and separation costs.
To the chagrin of shareholders, Insignia put the dividend on hold, with chief executive officer Scott Hartley describing the decision as prudent. But all has been forgiven with the share price rising about 45 per cent since its $2.20 low in early September. It closed Tuesday at $XXX (see graph below past).
In the latest quarterly update, the wealth management group highlighted continued momentum across key business areas, including its MLC Expand platform, which contributed $522 million in net inflows following a successful migration earlier this year.
Hartley says the company’s strategic initiatives laid out in the 2023-24 financial year and early this financial year have set a strong foundation for further growth.
“FUMA grew to $319.6 billion during the quarter, supported by strong market growth, and this provides the opportunity to drive efficiencies and economies of scale.”
Wrap funds under administration climbed to $97.9 billion, up 3.7 per cent for the quarter. Market gains of $3.9 billion drove much of this increase, alongside net inflows of $231 million. The company’s MLC Expand platform, a key contributor, continues to gain traction, reaching a significant milestone in $10 billion in funds under administration.
Insignia’s superannuation business also saw positive movement, with funds under administration rising by $3.3 billion, up 2.6 per cent to $130.8 billion. The increase was bolstered by strong market growth but offset slightly by net outflows of $768 million and pension payments of $340 million.
The company reported that its workplace superannuation channel achieved $49 million in net inflows, although this was a slower rate of growth than previous quarters, attributed to a reduction in new hires across its corporate clients.
Despite overall growth, Insignia faces challenges in its direct asset management capabilities, with institutional clients driving net outflows of $964 million. These outflows were largely the result of client rebalancing and unfavourable market conditions in the UK affecting Orchard Street’s real estate offerings. However, the company’s multi-asset investment products performed well, attracting $460 million in net inflows.
Meanwhile, the much-anticipated separation from National Australia Bank remains on track for the first half of 2025. Key milestones have already been reached, including the transition of general ledgers and unit pricing platforms. A major step is scheduled for November when more than 700,000 member accounts in the MasterKey and Plum registries will move to Insignia’s own systems.
Hartley used the quarterly statement to reaffirm Insignia’s focus on driving further efficiencies and embedding its new operating structure this financial year, with the group expected to announce its strategy for the next years at an upcoming investor day.
“Our strategic priorities, including the National Bank divorce and cost optimisation, are progressing well. We remain committed to delivering strong outcomes for clients and shareholders.”
