Liberty Financial Group returned to profit growth in FY25, driven by margin expansion and lower credit impairments, while declaring a generous 52 cent dividend. The company signals optimism for loan origination recovery and portfolio growth in the year ahead.
- 10% increase in underlying NPATA to $145 million
- Net interest margin expands in second half of FY25
- Lower impairment expenses as credit risk moderates
- Stable cost-to-income ratio with effective cost management
- Total dividend and special distributions of 52 cents per security
Profit Growth and Margin Expansion
Liberty Financial Group has reported a solid return to profit growth for the full year ended June 2025, with underlying net profit after tax and amortisation (NPATA) rising 10% to $145 million. This improvement was underpinned by a net interest margin (NIM) expansion in the second half of the year, benefiting from more favourable funding market conditions. Despite a slight dip in NIM overall for the year, the second half saw a positive uptick, reflecting the company’s ability to adapt to the evolving interest rate environment.
Credit Quality and Cost Discipline
Credit risk moderated during FY25, resulting in lower impairment expenses. Liberty’s disciplined risk management approach and portfolio stability contributed to this improvement, even as some segments faced competitive pressures. The cost-to-income ratio remained stable at 27.1%, demonstrating effective cost control despite wage inflation and other operational challenges. This balance between revenue growth and cost management helped sustain profitability.
Loan Origination and Portfolio Trends
New loan originations declined by 10% to $5.1 billion, reflecting subdued consumer demand and intense competition, particularly in motor finance. However, the company anticipates a rebound in loan applications and originations in the first half of FY26, supported by lower interest rates and a more normalized economic environment. Portfolio composition continues to shift towards higher-yielding secured and financial services assets, which now represent a larger share of the group’s net revenue.
Strong Balance Sheet and Attractive Dividend
Liberty maintains an investment-grade balance sheet with a leverage ratio of 13.6 and a cash return on equity of 12%. The company declared a total distribution and dividend of 52 cents per security for FY25, including special dividends, equating to a yield of approximately 15.6% based on the closing security price. This generous payout underscores Liberty’s commitment to delivering shareholder value while retaining capital for growth.
Looking Ahead
The outlook remains positive, with expectations of portfolio growth, continued NIM expansion, and a reduction in delinquency rates as the interest rate cycle normalizes. Liberty plans ongoing investments in automation and digital customer experiences to maintain operational efficiency and competitive advantage. While competitive pressures persist, particularly in motor finance, the company’s disciplined approach and strong capital position provide a solid foundation for future growth.
Bottom Line?
Liberty’s FY25 results mark a confident step forward, but the pace of loan origination recovery will be key to sustaining momentum.
Questions in the middle?
- How quickly will loan originations rebound in FY26 amid competitive pressures?
- What impact will ongoing interest rate changes have on net interest margins?
- Can Liberty maintain its disciplined cost management as wage inflation persists?