Challenger (ASX:CGF) share price on watch after results, CEO retirement

Why shares in the Aussie financial group are worth watching today.

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The Challenger Ltd (ASX: CGF) share price is one to watch this morning after the Aussie financial group's full-year results release.

Challenger share price on watch as underlying profit slumps

The Challenger share price will be in focus on Tuesday after the company released its results for the year ended 30 June 2021 (FY2021) to the market this morning. Some of the key points are highlighted below:

  • Net income down 14% to $682 million.
  • Normalised net profit before tax down 22% to $396 million.
  • Normalised net profit after tax down 19% to $279 million.
  • Challenger Life excess regulatory capital of $1.6 billion.
  • Normalised cost-to-income ratio of 41.2% (down 5.5 percentage points on FY2020).
  • Group assets under management (AUM) up 29% to $110.0 billion.
  • Fully franked, full-year dividend of 20.0 cents per share, up 2.5 cents per share on FY2020.

What happened for Challenger in FY2021?

Challenger reported record sales growth and "strong business momentum" in this morning's results. That helped the company record net profit before tax within guidance and a strong capital position.

The Challenger share price is one to watch after the company's funds management division reported a 30% increase in funds under management while the Challenger Life book grew 14% during the year.

Challenger completed the acquisition of MyLife MyFinance bank during the year. The group hopes to deliver a "more holistic offering" as part of its overall retirement planning package following the acquisition.

What else did Challenger announce?

Financial and operating results aside, there is another good reason to watch the Challenger share price this morning. Managing Director and CEO Richard Howes announced his intention to step down in March 2022, saying:

I am exceptionally proud of what we have accomplished at Challenger, both in my time as CEO and as part of the leadership team.

With the certainty that the business is primed for growth, I feel that now is a good time to step aside and begin the process for a new leader to drive Challenger's exciting next chapter."

Challenger share price snapshot

The Challenger share price will be in the spotlight today following the company's full-year results release, the resumption of dividends and the CEO retirement announcement.

Shares in the Aussie financial group are down 10.8% this year prior to the market open but have rebounded 33.2% in the last year.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

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