humm Group Faces $19m Legal Hit and Board Uncertainty Amid Profit Decline

Overview of Financial Performance

humm Group Limited (ASX – HUM) released its half-year results for the period ended 31 December 2025, revealing a significant 49% drop in statutory profit after tax to $13.9 million compared to the prior corresponding period. Revenue from ordinary activities also slipped 3% to $326 million. The decline in profitability was primarily attributed to a rise in credit losses, regulatory and legal expenses, and the absence of a prior period credit loss provision release.

Credit and Legal Challenges Impact Earnings

The Group faced an expected increase in credit losses within its Commercial lending portfolio, reflecting the natural seasoning of loans following strong volume growth in previous periods. Additionally, $8.3 million of operating expenses were linked to regulatory, legal, and compliance matters, including costs related to ASIC inquiries and remediation efforts in the Cards Australia business.

A notable development was the Federal Court judgment delivered on 30 January 2026, which resulted in a $19 million litigation provision related to Forum Finance proceedings. This provision represents a material post-balance sheet event and has been factored into the Group’s financials, underscoring ongoing legal risks.

Operational Highlights and Segment Performance

Despite the profit contraction, humm Group maintained stable assets under management at $5.4 billion, supported by growth in its Commercial lending and Point of Sale Payment Plans (PosPP) segments, particularly in Ireland and the UK. The Group’s net interest margin held steady at 5.5%, aided by funding optimisation and improved consumer yields.

Segment analysis showed mixed results – Commercial lending saw a 53% profit decline due to portfolio seasoning and increased credit losses, while Cards New Zealand posted a 36% profit increase driven by volume growth and cost management. The PosPP segment experienced a 3% profit decrease amid product transitions and regulatory changes in Australia.

Capital Management and Dividend Declaration

humm Group’s capital efficiency remained robust at 10.2%, with return on equity improving slightly to 5.4% from the previous half. The company declared an interim dividend of 1.5 cents per share, fully franked, payable on 26 March 2026, reflecting confidence in its cash flow and capital position despite the challenging environment.

Strategic and Governance Developments

Post-reporting period, the Group executed a second Forward Flow arrangement, securing a $500 million committed facility to support capital-lite funding of Commercial assets. Meanwhile, a shareholder-convened meeting under Section 249F is scheduled for 19 February 2026 to consider board changes, the outcome of which remains uncertain.

Additionally, humm Group continues to evaluate a Non-Binding Indicative Offer from Credit Corp to acquire the company, with the proposal still ongoing. These developments highlight a period of strategic transition and potential governance shifts ahead.