IAM Cuts $4M in Costs by Offloading Term Deposit Unit
Income Asset Management has sold its term deposit broking business to Perpetual Corporate Trust, streamlining operations and securing significant cost savings while ensuring client continuity.
- Sale of term deposit broking business to Perpetual Corporate Trust
- Achieves $4 million in cost savings including removing a loss-making unit
- Four IAM staff transition to Perpetual to maintain client relationships
- Minimal impact on IAM’s core bond and loan offerings
- Partnership expected to boost IAM’s recurring revenue through custody model
Strategic Divestment to Enhance Efficiency
Income Asset Management Group Limited (IAM) has announced the sale of its term deposit broking business to Perpetual Corporate Trust (PCT), a division of Perpetual Limited, effective 1 October 2025. While the sale was for a nominal amount, the transaction is a strategic move designed to deliver approximately $4 million in cost savings, including the removal of a $400,000 net loss-making business segment.
Client Continuity and Staff Transition
Importantly, the deal includes the transfer of four key IAM employees to PCT, ensuring that clients managing $1.58 billion in funds experience a seamless transition. This continuity is critical in maintaining trust and service quality, as these staff members have been instrumental in building the deposit book over the past four years.
Rationale Behind the Sale
The term deposit business has reached a scale where further growth demands significant investment in technology and marketing. Given the competitive and low-margin nature of the deposit broking market, IAM concluded that such investments would be more effectively managed by a larger operator. PCT, with over $8 billion in deposit and fixed income funds under administration and a robust technology platform, is well positioned to expand the business.
Financial and Operational Benefits
The sale removes $1.4 million in annual costs and reduces restructuring expenses, as PCT assumes responsibility for the transferred staff and their entitlements. IAM also mitigates business and cyber security risks associated with maintaining a sub-scale technology platform. This divestment aligns with IAM’s broader cost-out initiative and allows the company to focus on its core bond and loan offerings, which historically have minimal overlap with the term deposit business.
Looking Ahead
Beyond immediate cost savings, IAM anticipates broader benefits from its relationship with PCT, including growth in annual recurring revenue through a revised client custody model linked to its bond and loan services. This strategic refocus positions IAM to capitalize on more favourable margins and scale in its core income investment areas.
Bottom Line?
IAM’s divestment signals a sharper focus on core strengths, but the market will watch how recurring revenues evolve post-transition.
Questions in the middle?
- How will IAM’s recurring revenue from the revised custody model develop over the next year?
- What technology investments will Perpetual Corporate Trust prioritize to grow the term deposit business?
- Will IAM pursue further divestments or acquisitions to sharpen its strategic focus?
