Qualitas Limited reports robust interim results for the six months to December 2025, driven by strong deployment and expanding investor mandates, reaffirming its FY26 guidance.
- Fee earning funds under management up 38% to $10.9 billion
- Deployment surges 57% to $3.7 billion, boosting transaction fees
- Normalised net profit before tax rises 30% to $30 million
- Interim dividend increased 40% to 3.5 cents per share
- ESG initiatives and AI investments underpin strategic growth
Strong Momentum in Funds Management
Qualitas Limited (ASX, QAL) has delivered a compelling set of interim financial results for the six months ended 31 December 2025, highlighting significant growth across its core metrics. The company’s fee earning funds under management (FEF) climbed 38% year-on-year to $10.9 billion, reflecting strong investor demand and successful capital deployment strategies.
Deployment activity was particularly notable, surging 57% to $3.7 billion in 1H26. This robust deployment underpinned a 69% increase in transaction fees, contributing to a 53% rise in net funds management revenue. The growth in transaction fees and base management fees also drove margin accretion, with the funds management gross operating margin expanding to 46%, up 4 percentage points from the prior corresponding period.
Earnings Growth and Dividend Upswing
Qualitas reported a 30% increase in normalised net profit before tax (NPBT) to $30 million, supported by accelerating top-line growth and margin expansion. Normalised net profit after tax (NPAT) rose 27% to $21.1 million. The company declared an interim fully franked dividend of 3.5 cents per share, a 40% increase on the previous year, reflecting confidence in ongoing earnings momentum and cash flow generation.
While principal income and Arch Finance contributions were softer compared to 1H25, the core funds management platform demonstrated resilience, with disciplined cost management keeping employee and corporate expenses growth below revenue increases. Arch Finance is undergoing a turnaround strategy with a new management team, showing pipeline growth and strategic repositioning away from highly competitive lending markets.
Expanding Investor Base and Market Position
Qualitas continues to deepen relationships with both domestic and offshore investors, including new mandates from global pension funds. The committed funds under management increased 18% year-on-year to $10.9 billion, with a pool of potential embedded and unrecognised performance fees estimated at $99 million over the next seven years. The company’s ability to attract repeat borrowers and secure follow-on investments, accounting for 76% and 28% of deployment respectively, demonstrates strong market positioning and trust.
Geographically, Qualitas is capitalising on shifting private credit dynamics, with growing interest in Europe and the Asia-Pacific region complementing its Australian base. The company’s focus on real estate private credit, opportunistic equity, and build-to-rent residential sectors aligns with long-term structural tailwinds, including increasing apartment commencements and approvals.
Sustainability and Innovation at the Forefront
Qualitas is advancing its ESG agenda with initiatives such as sourcing 100% GreenPower for offices, offsetting residual corporate emissions, and securing $264 million in green loan financings. The company is also investing in technology and talent, including AI-driven investment assessment tools and new senior hires to bolster origination capabilities. These efforts aim to enhance operational efficiency and support sustainable growth.
Outlook and Guidance
Reaffirming its FY26 guidance, Qualitas expects normalised NPBT in the range of $60 million to $66 million, representing a 13% to 25% increase over FY25. The company anticipates continued growth in recurring base management fees, supported by strong deployment and a healthy pipeline. Dividend payout ratios are targeted between 50% and 95% of operating earnings, maintaining shareholder returns alongside reinvestment in growth initiatives.
Bottom Line?
Qualitas’ strong 1H26 performance sets a solid foundation for continued growth, but investors will watch closely how evolving market conditions and performance fee realisations shape the second half.
Questions in the middle?
- How will the turnaround at Arch Finance impact overall profitability in FY26 and beyond?
- What is the timing and likelihood of recognising the growing pool of unrecognised performance fees?
- How will shifting global private credit dynamics influence Qualitas’ capital raising and deployment strategies?