How Did hummgroup Achieve a 57% Profit Surge Amid Regulatory Challenges?

Strong Financial Performance Amid Transformation

humm Group Limited (ASX – HUM) has delivered a standout financial performance for the full year ended June 30, 2025, reporting a refined cash profit after tax of $52.9 million, a 57% increase from the prior year. This growth was underpinned by a 10% rise in assets under management to a record $5.5 billion and a stable net interest margin of 5.4%, only marginally down by 10 basis points. The company’s focus on profitable growth, cost discipline, and technology transformation has clearly begun to bear fruit.

CEO Angelo Demasi highlighted the company’s strategic priorities, noting that the Commercial business remained resilient despite broader SME market challenges, delivering a solid cash profit of $45.3 million. This segment’s strength was supported by diversification across products, industries, and geographies, as well as a record volume month in June. However, credit losses in the Victorian transport sector and the seasoning of the receivables book contributed to an expected rise in net credit losses in the second half of FY25, with elevated losses anticipated to continue into the first half of FY26 before normalising.

Consumer Finance and Regulatory Adaptation

The Consumer segment saw a remarkable turnaround, with cash profit after tax increasing from $8.6 million to $24.8 million. This improvement was largely driven by strong performances in the New Zealand Cards and humm Ireland businesses. New Zealand Cards volumes grew 5%, and the business outperformed the market despite macroeconomic headwinds. Meanwhile, the Australian Cards business experienced a slight volume decline but improved credit quality significantly, reducing net credit losses by 37%.

In response to new Buy Now Pay Later (BNPL) regulations, humm AU launched a new regulated loan product in June 2025, replacing its legacy Point of Sale Payment Plan offering. While this transition has slowed volumes and led to an $8.5 million impairment of previously capitalised software, management remains focused on refining the platform and expects the investment to position the business for future growth. The UK business also marked a milestone by achieving its first monthly positive cash profit in June 2025, signaling progress in international markets.

Capital Management and Outlook

hummgroup’s balance sheet remains robust, with $125.4 million in unrestricted cash and $1.6 billion in undrawn funding capacity. The company fully repaid $53.6 million in subordinated perpetual notes during the year, further strengthening its financial position. The Board declared a fully franked final dividend of 0.75 cents per share, bringing total dividends for FY25 to 2.00 cents per share and delivering an annualised shareholder return of 4.8%.

Looking ahead, management is prioritising profitable growth through continued investment in technology platforms and customer experience enhancements. The company anticipates elevated commercial credit losses in the first half of FY26 but expects these to normalise by year-end. Restoring volume growth in the Australian market and advancing the Cards technology platform rebuild are key focus areas for the coming year.

Overall, hummgroup’s FY25 results reflect a company navigating regulatory shifts and market challenges with strategic agility, balancing investment and cost control while delivering solid returns to shareholders.