EQT’s Margin Recovery Faces Test Amid Heightened Regulatory Scrutiny
EQT Holdings Limited reported record funds under management and a solid financial performance for FY25, successfully completing its three-year strategic integration program. The company’s margin recovery and dividend growth signal a confident outlook amid ongoing regulatory challenges.
- Record FUMAS up 28% to $254 billion
- Revenue increased 7%, underlying NPBT up 4%
- Successful completion of AET integration and technology upgrades
- Second-half FY25 margin improvement and return to business-as-usual costs
- 7% dividend increase with payout ratio normalising to 89%
Strong Financial Performance and Strategic Milestones
EQT Holdings Limited (ASX, EQT) delivered a robust set of results for the year ended 30 June 2025, highlighted by record funds under management and supervision (FUMAS) reaching $254 billion, a 28% increase from the prior year. Revenue grew 7% to $182.5 million, while underlying net profit before tax (NPBT) rose 4% to $53.7 million. These gains reflect the successful execution of a three-year strategic growth plan, including the acquisition and integration of Australian Executor Trustees (AET), which exceeded synergy expectations.
The company’s Managing Director, Mick O’Brien, emphasised the completion of key initiatives such as the AET integration, technology platform upgrades with the rollout of NavOne, and the exit from the CTS-EU segment. These efforts contributed to a significant margin recovery in the second half of FY25, with EBITDA margins improving by 310 basis points year-on-year and underlying NPBT margins returning close to pre-integration levels.
Operational Highlights and Segment Growth
EQT’s business segments showed differentiated growth dynamics. The Corporate Trustee Services (CSTS) division saw strong demand, onboarding 126 new schemes over three years and managing a portfolio of 360 schemes by June 2025. Revenue growth in CSTS was driven by new business, net flows, and investment market appreciation, supported by increased staffing and compliance resourcing.
The Trustee Wealth Services (TWS) segment experienced more moderate organic growth but benefited from technology-driven efficiency gains and the realisation of $7 million in revenue synergies from the AET acquisition. The company also transitioned custody and fund administration services to HUB24, reflecting a strategic outsourcing move to enhance operational leverage.
Regulatory Environment and Risk Management
EQT navigated a complex regulatory landscape in FY25, managing compliance with APRA’s operational risk standards and the Financial Accountability Regime, among other reforms. The company disclosed its proactive cooperation with ASIC and APRA regarding irregularities identified in certain superannuation funds under its trusteeship, notably the Shield Master Fund and First Guardian Master Fund. While EQT was not the responsible entity for these schemes, it has taken steps to support affected members and engage with regulators to safeguard outcomes.
Outlook and Strategic Priorities for FY26
Looking ahead, EQT anticipates a positive FY26, underpinned by continued growth in the corporate trustee market and steady performance in trustee wealth services. The company plans to maintain technology investments at a normalized run rate to further enhance client experience and operational efficiency. EQT’s strong balance sheet, with low gearing at 10.4%, positions it well to pursue inorganic growth opportunities and respond to evolving regulatory demands.
Despite exposure to investment market volatility, EQT’s enduring income profile, where 70% of revenue is linked to market movements, and its leadership in key market segments provide a solid foundation for sustainable growth. The company also highlighted ongoing efforts to deepen community impact through charitable donations and bequests, reinforcing its broader social commitment.
Bottom Line?
With strategic integration behind it and margins recovering, EQT is poised for growth but must navigate regulatory scrutiny and market risks carefully.
Questions in the middle?
- How will EQT balance growth ambitions with increasing regulatory compliance costs?
- What inorganic opportunities might EQT pursue to scale its trustee services?
- How will the company’s technology investments translate into long-term operational efficiencies?
