Insights

Challenger (ASX:CGF) share price sinks 10% following third quarter update

The Challenger Ltd (ASX:CGF) share price is sinking lower on Tuesday following the release of its third quarter update for FY 2021…
The post Challenger (ASX:CGF) share price sinks 10% following third quarter update appeared first on The Motley Fool Australia. –

Thumbs down Facebook icon over dark screen

The Challenger Ltd (ASX: CGF) share price has come under pressure following the release of its third quarter update.

In morning trade, the annuities company’s shares are down 10% to $5.90.

How did Challenger perform in the third quarter?

Challenger was on form again during the third quarter and delivered further growth across the business.

According to the release, group assets under management rose 8% for the quarter and now exceed $100 billion. This means Challenger is now Australia’s third largest active asset manager.

Supporting this growth was a 6% increase in Life investment assets. Management notes that this was driven by record quarterly annuity sales of $1.6 billion and record quarterly Life book growth of 9.2% for the quarter.

Also growing during the third quarter was its funds under management (FUM) for the Funds Management business. Challenger recorded a 9% increase in FUM, including $7 billion of net flows.

Challenger’s Managing Director and Chief Executive Officer, Richard Howes, was pleased with the quarter and notes that its strategy is paying off.

He said: “Challenger’s performance in the third quarter demonstrates our strategy to diversify revenue is working. We have been investing in our distribution, product and marketing capability over recent years which is extending our customer reach and diversifying our product offering and distribution channels.”

What does this mean for FY 2021?

Based on its performance in the third quarter, management appears confident the company will achieve its normalised net profit before tax guidance for FY 2021.

However, this is only expected to be at the bottom end of the $390 million to $440 million guidance range. This may be what is weighing on the Challenger share price today.

Management notes that its guidance reflects the sharp decline in credit spreads over the year, which were not fully reflected in customer pricing.

Positively, Challenger is responding to the investment conditions by significantly adjusting annuity pricing. However, this won’t be in time to impact its FY 2021 earnings.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Challenger (ASX:CGF) share price sinks 10% following third quarter update appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!