FSA Group Limited has reported a robust half-year performance with a 68% jump in profit before tax and declared a fully franked interim dividend of 3.5 cents per share. The company forecasts continued growth in 2026, targeting up to $40 million in annual profit.
- Profit before tax up 68% to $10.8 million
- Loan pools grow 11% to $972 million, driven by car loans and asset finance
- Net margin improves to 54%, supporting stronger earnings
- Declared fully franked interim dividend of 3.5 cents per share
- Plans $300 million asset-backed security and ongoing share buy-back
Strong Half-Year Growth
FSA Group Limited has delivered a standout half-year result for the six months ended 31 December 2025, with total operating income rising 27% to $38.8 million and profit before tax soaring 68% to $10.8 million. Profit after tax attributable to members climbed 59% to $6.2 million, reflecting both top-line growth and improved operational efficiency.
The company’s lending business, which includes home loans, car loans, unsecured personal loans, and asset finance, was the primary driver of this performance. New loan originations increased 5% to $222 million, while the overall loan pool expanded 11% to $972 million. Notably, growth was strongest in car loans and asset finance, which are fixed-rate products and now represent 62% of the loan book, up from 46% two years ago.
Improving Margins and Operational Leverage
FSA Group’s net margin improved to 54%, up from 47% in prior periods, underpinning stronger profitability. The company attributes this to disciplined pricing and operational efficiencies, including automation and offshore expansion. While the services segment recorded a small loss, the core lending business generated a profit before tax of $11.7 million.
The company is targeting further growth supported by broker channels and automation, aiming to increase new originations to over $600 million annually and grow loan pools to approximately $1.3 billion. This scale is expected to unlock operating leverage benefits, with a profit before tax target of $36 million to $40 million and a return on equity exceeding 25%.
Capital Management and Dividend Policy
Reflecting confidence in its outlook, FSA Group declared a fully franked interim dividend of 3.5 cents per share, payable on 5 March 2026. The company expects full-year dividends between 7 and 8 cents per share, balancing shareholder returns with reinvestment to support loan book growth. Additionally, FSA Group has initiated an on-market share buy-back program to enhance capital efficiency.
In September 2025, the company completed a $300 million asset-backed security transaction, diversifying its funding sources alongside existing warehouse facilities provided by Westpac and institutional investors.
Risks and Outlook
While the outlook is positive, FSA Group acknowledges risks related to broker channel adoption, funding availability, and credit quality, particularly in car loans and asset finance where impairment expenses have risen. The company continues to focus on credit quality and arrears management to mitigate these risks.
Looking ahead, FSA Group expects profit before tax for the full 2026 financial year to range between $23.5 million and $25.9 million, representing a 45% to 60% increase over 2025. The company’s strategic emphasis on automation, disciplined pricing, and expanding fixed-rate lending positions it well to capture growth opportunities in the competitive Australian lending market.
Bottom Line?
FSA Group’s strong half-year momentum and clear growth strategy set the stage for a potentially transformative 2026, but investors should watch closely for execution risks around funding and credit quality.
Questions in the middle?
- Will broker channels scale as expected to support $600 million annual origination?
- How will rising impairment expenses in car loans and asset finance affect future profitability?
- What impact will the share buy-back program have on shareholder returns and capital structure?