Liberty Group FY26 NPAT Up 7.8% to $143.8 Million on Record Loan Originations

Profit Growth Amid Lower Revenue

Liberty Financial Group (ASX:LFG) reported a solid 8% increase in statutory net profit after tax (NPAT) to $143.8 million for the year ended 30 June 2026, despite a 3.5% decline in total operating income to $1.44 billion. The underlying net profit after tax and before amortisation (NPATA) grew 7% to $155.6 million, reflecting disciplined cost management and a strategic shift in asset mix.

The revenue dip was largely due to a 5% decrease in interest income, driven by lower yields from Reserve Bank of Australia (RBA) cash rate cuts and reduced average origination yields. However, this was partially offset by a 2% increase in average financial assets to $15.2 billion and a shift towards higher-yielding secured and financial services segments.

Record Loan Originations and Portfolio Growth

FY26 saw Liberty originate a record $6.1 billion in new financial assets, up 20% from $5.1 billion in FY25. This surge was supported by the acquisition of a 50% stake in Moula Money Pty Ltd in December 2025, which contributed $14 million to revenue and $1.7 million to profit since acquisition.

The group’s total financial assets under management increased 3% to $15.2 billion, with portfolio growth concentrated in the secured finance and residential segments. Notably, the motor finance portfolio returned to growth in the second half of FY26, and commercial lending remained strong.

Stable Credit Quality and Conservative Provisioning

Despite an environment of rising interest rates and cost-of-living pressures, Liberty maintained stable credit quality. Impaired loans slightly decreased by 2% to $335 million, with 74% of customers in 90+ day delinquency supported by property security averaging a loan-to-value ratio (LVR) of 68%.

Collective provisions rose modestly to $65 million, reflecting a more conservative economic outlook and portfolio growth, while specific provisions remained steady at $38 million. The group’s expected credit loss (ECL) provisioning incorporated forward-looking macroeconomic scenarios, with increased weighting to downside risks due to deteriorating economic conditions in New Zealand.

Margin Expansion and Cost Discipline Drive Returns

Liberty’s net interest margin (NIM) expanded slightly to 2.50%, boosted by asset mix changes and positive funding market conditions. Funding costs decreased with a weighted average cost of borrowing falling from 6.05% to 5.46%, aided by lower benchmark rates and funding margins.

Operating expenses declined 4.4% to $1.28 billion, driven by lower interest expenses and stable impairment charges. Personnel costs rose slightly due to wage inflation but were offset by a 2% reduction in average full-time equivalent staff. The cost-to-income ratio improved marginally to 26.8%, underscoring effective cost management.

Dividend and Capital Position

Reflecting strong earnings and capital discipline, Liberty declared a fully franked special dividend of 15 cents per stapled security payable on 21 September 2026, matching the previous year’s special dividend but significantly higher than the 5 cents paid in FY24. Additionally, a final unfranked distribution of 7.5 cents per security will be paid alongside the first interim distribution for FY27.

The group ended FY26 with a leverage ratio of 14.0 times equity, up slightly from 13.6 times, and maintained an investment grade BBB credit rating with a stable outlook from Standard & Poor’s. Underlying cash return on equity improved to 13.1%.

Executive Remuneration Aligned with Performance

Liberty’s remuneration report detailed performance-based incentives for key management personnel (KMP), linking medium-term and long-term incentives to financial metrics such as NPATA, total shareholder return, and environmental, social, and governance (ESG) targets. The FY26 medium-term incentive (MTI) outcome was 97% of target, reflecting the group’s solid financial and non-financial performance.

The group’s equity incentive plan continues to emphasize retention and alignment with securityholder interests, with long-term incentive (LTI) options subject to vesting over three to five years based on performance hurdles.

Risk Management and Climate Reporting

Liberty’s risk management framework remains robust, overseen by a dedicated Risk, Audit and Compliance Committee. The group continues to address operational, credit, liquidity, market, and strategic risks with appropriate policies and controls.

Climate risk is integrated into the risk management framework, with mandatory climate-related disclosures commencing for FY26 under AASB S2 standards. The group’s Sustainability Report, due in September 2026, will provide further details on environmental and social governance initiatives.