Perpetual delivers 12% profit growth as simplification strategy gains traction
Perpetual Limited has reported underlying profit after tax (UPAT) of $112.7 million for the half year ending 31 December 2025, representing 12% growth on the prior corresponding period. The financial services group declared an interim dividend of 59.0 cents per share (unfranked), reflecting a 60% payout ratio on UPAT.
The result demonstrates operational resilience during a period of corporate uncertainty, with negotiations ongoing for the sale of Wealth Management to Bain Capital Private Equity. Operating revenue increased 2% to $697.9 million, while diluted earnings per share on UPAT rose 9% to 97.1 cents. Net profit after tax reached $53.9 million, a material improvement from $12.0 million in 1H25.
Management has upgraded FY26 expense growth guidance to approximately 1-2%, reflecting disciplined cost management and improving foreign exchange rates. The Simplification Program has delivered $60 million in annualised savings to date, with the Group on track to achieve its targeted $70-80 million by FY27.
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What is the Simplification Program and why does it matter?
The Simplification Program is a multi-year cost reduction initiative announced in August 2024, targeting structural efficiencies across Perpetual’s operations. The Group has upgraded its target to deliver $70-80 million in annualised savings by FY27, with $60 million already achieved as at 31 December 2025.
Savings recorded in the 1H26 results totalled $26.9 million, primarily driven by reduced employee expenses and back-office consolidation. The programme represents a critical component of management’s strategy to deliver improved returns to shareholders while maintaining investment in growth initiatives.
Three-year phasing of the Simplification Program:
- Year 1 (FY25): $16 million achieved
- Year 2 (FY26): $20-25 million targeted
- Year 3 (FY27): $6-11 million targeted to reach $70-80 million total
The cost efficiencies directly support margin expansion and enhance operational flexibility. Management’s ability to deliver targets on schedule builds credibility around capital allocation priorities and positions the Group to fund strategic initiatives without compromising shareholder returns. Key simplification focus areas for 2H26 include finance systems transformation, back and middle office consolidation, and ongoing rightsizing of support functions.
Divisional performance snapshot
Corporate Trust extends growth streak
Corporate Trust delivered underlying profit before tax (UPBT) of $49.0 million, up 11% on 1H25, underpinned by growth across all three business segments. The division recorded its tenth consecutive year as KangaNews ‘Australian Trustee of the Year’ and achieved a Net Promoter Score of +62, reflecting strong client relationships.
Debt Market Services (DMS) revenue increased 10% to $46.9 million, benefiting from sustained volumes in the Australian securitisation market. Managed Funds Services (MFS) revenue rose 7% to $46.6 million, driven by growth in Custody and Singapore operations. Digital and Markets revenue surged 20% to $15.4 million, supported by implementation fees for Perpetual Intelligence Software-as-a-Service offerings.
Total Funds Under Administration (FUA) reached $1,314.3 billion, while Digital and Markets Assets Under Administration (AUA) stood at $585.8 billion as at 31 December 2025.
Asset Management holds firm amid outflows
Asset Management reported UPBT of $106.9 million, up 4% on 1H25, despite net outflows of $10.0 billion during the period. Assets under management (AUM) remained stable at $227.5 billion, with market movements offsetting redemptions. Performance fees totalled $10.0 million, compared to $15.9 million in the prior corresponding period.
Investment performance remained resilient, with 54% of strategies outperforming their benchmark over three years to 31 December 2025. Australian distribution generated $1.4 billion in net inflows, supported by successful product launches including the Perpetual Diversified Income Active ETF (ASX: DIFF), which attracted over $215 million since its August 2025 launch.
Barrow Hanley experienced positive flows, with market movements more than offsetting outflows from US equities. J O Hambro delivered strong investment performance in UK and emerging markets equities, generating performance fees in 1H26. Pendal recorded solid results in cash, fixed income and Australian equities, with inflows into defensive strategies offsetting equity redemptions.
Wealth Management remains resilient
Wealth Management produced UPBT of $23.7 million, down 19% on 1H25, reflecting higher expenses as the business maintained investment in staff, premises and technology during the sale process. Funds Under Advice (FUA) increased to $21.9 billion, supported by institutional inflows and improved equity markets.
The division maintained operational strength, with five advisers recognised in the Barron’s Top 150 Financial Advisers list. Perpetual Wealth was a finalist for a third consecutive year in the Licensee Managed Account and Australian Equities categories at the 2025 IMAP Managed Account Awards. Negotiations with Bain Capital regarding the potential sale of the Wealth Management business continue.
| Division | 1H26 UPBT | 1H25 UPBT | Change |
|---|---|---|---|
| Asset Management | $106.9m | $102.6m | +4% |
| Corporate Trust | $49.0m | $44.0m | +11% |
| Wealth Management | $23.7m | $29.2m | -19% |
Strategic priorities and product development
Perpetual has accelerated product innovation to capitalise on structural shifts in the asset management industry. The successful launch of the Perpetual Diversified Income Active ETF (ASX: DIFF) demonstrates the Group’s ability to capture flows in the listed market, with the product now holding over $215 million in AUM. The Perpetual Credit Income Trust (ASX: PCI) raised $268 million in late 2025 and now holds over $800 million in total assets.
Management has progressed discussions with Partners Group on alternative asset convergence products, introducing early-stage product designs to market to assess demand. The convergence between traditional and alternative exposures represents a significant industry trend, expected to drive $6-10.5 trillion of capital reallocation over the next five years according to McKinsey & Company research.
Barrow Hanley successfully launched its US Mid-Cap Value fund into the UK market, attracting over $165 million in AUM. The Group has appointed a new CEO at J O Hambro to drive a turnaround focused on four priority areas: building a scalable active range, modernising the investment platform, focusing international distribution on priority markets, and accelerating diversification through inorganic initiatives.
Bernard Reilly, CEO and Managing Director
“Our goal is for Perpetual to be a strong financial services group, with differentiated businesses, that operate with discipline, to deliver improved returns for our shareholders over time.”
Product innovation in Active ETFs positions Perpetual to capture the industry shift away from pure passive towards cost-effective active solutions. In 2024, Active ETFs captured 37% of ETF flows in their sector, reflecting growing investor appetite for transparent, liquid structures that combine active management with lower fees. The Group is developing a roadmap to launch Active ETFs in the US market using MultiSeries Trusts, a cost-effective and quick-to-market solution.
Balance sheet and capital management
Perpetual’s balance sheet remains well positioned to support growth initiatives while maintaining shareholder returns. Net assets stood at $1,611.4 million as at 31 December 2025, with a cash position of $325.6 million and $150 million in surplus available liquid funds providing strategic flexibility.
Seed capital deployed totalled $182.8 million, supporting organic growth initiatives across the boutique investment managers. The Group maintains a commitment to seed recycling, with average ownership periods of three years and formal committee oversight to ensure capital efficiency. Borrowings of $742.0 million include capitalised facility costs, with the Group maintaining disciplined leverage ratios.
The balance sheet structure supports Perpetual’s dividend policy of paying 60-90% of UPAT on an annualised basis. Dividends for 2H26 are expected to be unfranked, consistent with the Group’s current tax position. Positive free cashflow generation, driven by net cash receipts in the course of operations, underpins capital management flexibility for both growth investment and shareholder returns.
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Outlook and FY26 guidance
Perpetual has improved its FY26 total expense growth guidance to approximately 1-2%, reflecting disciplined cost management and the benefit of improving foreign exchange rates. The Simplification Program remains on track to deliver $70-80 million in annualised savings by FY27, with key initiatives including finance systems transformation and back-office consolidation progressing as planned.
Management has outlined four key priorities for FY26: delivering cost reduction commitments, retaining market leadership in Corporate Trust and investing in expanding capability, targeted investment in new products and capabilities across Asset Management, and continuing to remove complexity to create a leaner Group structure.
FY26 key priorities:
- Deliver cost reduction commitments through the Simplification Program
- Retain market leadership position in Corporate Trust and invest in expanding capability
- Targeted investment in new products and capabilities across Asset Management
- Continue to remove complexity and create a leaner, more efficient structure for the Group
The improved expense guidance signals management confidence in delivering efficiency gains while maintaining growth investment. Corporate Trust continues to execute its five-year growth strategy, benefiting from strong volumes in securitisation markets and expanded capabilities in Digital and Markets. Asset Management is focused on restoring J O Hambro to its heritage strength while building out its Active ETF offering and distribution capabilities. Negotiations with Bain Capital regarding the potential sale of Wealth Management continue, with completion expected to provide additional capital for strategic deployment.
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