Nick Hamilton, CEO, Challenger
Challenger Financial Group hopes to complete the sale of its banking subsidiary to New Zealand’s Heartland Group by the middle of this year and return around A$100 million of excess capital to shareholders.
Challenger surprised the market last August, when it announced it had commenced a strategic review of Challenger Bank. It had acquired the bank (MyLifeMyFinance) only a year earlier.
At the time, it said: “Since announcing the bank acquisition in December 2020, market conditions have changed and it is becoming apparent the bank is unlikely to realise the expected benefits in the timeframe anticipated.”
In October it announced that it would sell the bank to Heartland. The sale is subject to regulatory approvals.
Challenger’s financial report for the six months to December 2022, released yesterday, shows the bank made an EBIT loss of A$4.3 million and booked impairments to $2 million.
Net interest income was $4.7 million and operating expenses were $9 million. The bank has lending and finance assets of $411 million and a $224 million deposit book.
Challenger said it expects the sale price to be around $36 million (subject to adjustments based on the net asset value), which is in line with the purchase price of $35 million.
Meanwhile, Challenger is going ahead with the development of its lending joint venture with US alternative asset manager Apollo Global Management.
The JV is aimed at enhancing Challenger’s retirement services offering, which will involve funding the lending business through income-generating managed funds. Apollo has an 18 per cent shareholding in Challenger.
At an investor presentation yesterday, Challenger chief executive Nick Hamilton said senior executives and directors have been appointed to the JV, including JV chair David Moffat and chief executive Chris Plater.
Hamilton said the business is “in market”, with a pipeline of originations. Its offerings include accounts receivable finance, invoice and trade finance, equipment finance, auto finance and agricultural funding.