Perpetual reports ‘resilient’ growth with 46% UPAT rise

Perpetual’s underlying profit after tax (UPAT) grew 46 per cent in the first half of the 2024 financial year to $98.2 million, as per its latest half-year results.

In a statement to the ASX on Wednesday, it attributed the strong growth to a full six-month contribution of Pendal Group, which it acquired in January 2023, along with higher wealth management earnings.

Rob Adams, Perpetual chief executive and managing director, noted the integration of the Pendal businesses is “progressing well”, with the firm exceeding its first-year target of $40 million in run-rate synergies. It affirmed total run-rate synergies of $80 million by 2025.

For the first half of FY2024, net profit after tax was up 29 per cent to $34.5 million, reflecting the acquisition including associated integration costs.

Perpetual announced operating revenue stood at $657 million, compared with $388 million in the prior corresponding period, marking growth of some 69 per cent.

The board determined a 35 per cent franked interim dividend of 65 cents per share.

Mr Adams said the half-year financial performance reflected the increased scale of its asset management business, which was up 128 per cent on 1H23, and the resilience of its corporate trust and wealth management business.

“The first half of 2024 represented the first full six-month contribution from Pendal Group. The group’s assets under management (AUM) stability over the last six months reflects the benefits of our larger, more diverse total AUM base as a global multi-boutique asset manager, benefiting from investment market growth and the strong investment performance delivered to our clients,” he stated

In terms of Perpetual’s businesses, asset management reported underlying profit before tax (UPBT) was $95.8 million, up 165 higher than 1H23, driven by Pendal contributions alongside positive market movements and net inflows in US-based investment manager Barrow Hanley, which was acquired in late 2020.

Mr Adams said the firm was “encouraged” by the growth of Barrow Hanley’s global and international equities strategies, with approximately $2.5 billion in net flows to those strategies over the half.

Total AUM was $213 billion, an increase of $1.8 billion on 2H23.

Meanwhile, the corporate trust reported UPBT of $40.8 billion, down 2 per cent on the corresponding period, which has been attributed to a tougher market environment for debt market services, investments in technology infrastructure to support growth, and higher operating expenses.

Total funds under administration (FUA) was $1.2 trillion, up 5 per cent on 1H23.

“Our corporate trust continues to demonstrate resilience in the higher interest rate environment,” Mr Adams explained.

“The managed funds services segment saw growth in revenue of 5 per cent through the period, while debt market services revenue was flat due to intense competition from the major banks in the lending market, and softer average FUA.”

He flagged product development on the agenda, given continued interest in Perpetual’s treasury and financial intelligence (TFI) product and a new fixed income intelligence product, which launches an international bond capability this month.

Additionally, wealth management delivered UPBT of $26 million, driven by organic growth across all segments, and marking a rise of 18 per cent higher than the prior corresponding period. FUA was $19 billion, up 7 per cent on 1H23, underpinned by improving equity markets, positive net flows, and investment performance.

Commenting on the outlook, Mr Adams said: “Perpetual Group has three quality businesses with scale and significant revenue streams that have enabled it to operate through a challenging environment for financial services businesses.”

The results also touched upon the strategic review announced in December 2023 to explore the benefits of separating Perpetual’s corporate trust and wealth management businesses and creating a more focused asset management business.

The board said it was “pleased” with the progress of the review to date.

In its latest quarterly outlook last month, Perpetual had recorded net outflows of $4.3 billion in its asset management business, something it pinned on a “difficult period” globally for active asset managers and the worst quarter in 15 years for active equity fund flows.