Computershare (ASX:CPU) reported a stronger first-half performance for fiscal 2026, highlighting earnings growth, expanding underlying margins, and resilience in margin income despite sharply lower U.S. cash rates. Management said it is upgrading full-year earnings guidance and increasing the interim dividend as the company continues to focus on organic growth, disciplined cost management, and selective acquisition opportunities.
First-half performance and upgraded guidance
Management said EBIT excluding margin income (EBIT XMI), which it described as reflecting underlying business performance, rose 12% versus the prior corresponding period. Management EPS increased 3.9% in the half, and return on invested capital was cited as “over 36%.” Management also said leverage declined to 0.3x.
Margin income held up despite lower rates
Management emphasized that margin income declined only 5% in the half even as U.S. cash rates were down more than 17% year over year. The company attributed the outcome to what it called its “natural hedge,” including:
- Higher client balances that helped offset lower yields
- Only about one-third of balances being fully exposed to short-term rate movements
- Lower group interest costs because the company’s debt is deliberately floating rate, alongside reduced debt
CFO Nick Oldfield said lower rates reduced interest expense by about $14 million in the half, and the net impact of lower rates on the group in the first half was about $8 million, which he said was roughly 1.5% of profit before tax.
For FY26, management now expects margin income of about $730 million, an upgrade of $10 million from the prior $720 million expectation. This assumes average balances of $30.8 billion and a yield of 2.37%, based on curve assumptions as of Feb. 9 that include one U.S. rate cut in March and one U.K. rate cut in May. Oldfield added that hedged yield is expected to increase to “over 3.5%” in FY27, and said each 50 basis point move in global rates is worth around $48 million in margin income, though the company expects impacts can be constrained by balance growth, lower debt costs, and hedged yield changes.
Divisional trends: issuer services, corporate trust, and employee share plans
Issuer services posted the fastest revenue growth in the group, with management citing contributions across business lines. Register maintenance revenue rose more than 4% on new client wins in major markets. Corporate actions revenue grew more than 12%, though management said overall activity remains about 25% below peak 2021 levels. Hong Kong IPOs were called out as a highlight, with a sharp increase in completed deals and improved market share of new listings. Management also noted “north of a 400% increase” in retail participation in IPO applications, which it said can create recurring register maintenance revenue as applicants become shareholders.
Management said M&A volumes have not fully recovered, with completed deals down across all markets except Australia, though deal pipelines were described as somewhat more positive. Computershare also noted it completed two small investor-related acquisitions in January 2025 (not in the prior corresponding period), describing them as lower margin while scale and capability are built.
Corporate trust delivered fee revenue growth of over 12%, supported by increased issuance volumes across most product categories and strong volume growth in structured products including RMBS, ABS, and CMBS. In Q&A, management cited market issuance data points including RMBS issuance up 35%, CMBS up 5%, CLO issuance up 10%, and ABS up over 35%, describing the elevated levels as a “catch-up” after a prior drop and saying it expects momentum to continue into the second half, including the favorable mix toward structured products.
Employee share plans revenue increased 5%, with management citing client wins across markets, higher fee revenue, and growth in transactional revenues. Management pointed to continued growth in equity-based compensation and increased issuance, including Europe where issuance of units increased by over 20%. In Q&A, management said assets under administration rose 25% in 1H26 versus 1H25 and emphasized that the size of the book, not just market cycles, is a key driver.
Costs, margin targets, and capital returns
Oldfield said business-as-usual operating expenses rose 2.6%, which management said was in line with its objective to hold BAU OPEX at or below inflation. He attributed cost control to $16.5 million of cost-out benefits, comprising $6.2 million of corporate trust operating synergies and $10.3 million of savings from the company’s stage five cost-out program.
Management also detailed investment spend of $25.7 million, including $5 million tied to six months of ownership of Engage, CMi2i, and BNY Trust Company of Canada, with the remainder directed to technology and people to support product innovation and growth initiatives. In response to analyst questions, management said a large part of that non-M&A investment was a one-off step up that should not recur at the same level into FY27, though there may be some similar investment in the second half.
Computershare reiterated its ambition to reach a 20% group EBIT XMI margin, saying margins excluding margin income expanded to 16% in the first half and management believes it is “well on our way” to the target. In Q&A, management indicated a timeline of roughly FY28 to reach the target, consistent with a previously stated 2–3 year horizon. Oldfield also said cost-out benefits would extend into FY27, with expected pre-tax savings from stage five and corporate trust programs of $23.2 million in FY27.
On shareholder returns, management said buybacks are currently tax-inefficient for the company, and the board increased the interim dividend to the top half of its payout ratio range. The interim dividend was raised to AUD 0.55 per share, a 22% increase. In Q&A, management suggested the payout ratio could remain in the low-to-mid 50% range, while noting capital allocation beyond that would depend on other uses of capital.
Strategy: tokenization engagement and acquisition discipline
Management said it continues to engage with regulators and market participants on tokenization, describing a proposed “issuer-sponsored token” model intended to replicate the trust and protections of traditional registered ownership while enabling digital transferability and broader accessibility. Management said it has been engaging with the SEC’s digital task force and views the process as a long-term opportunity, while also stating it does not expect tokenization to be a “huge cost element” and that current demand is limited beyond a small number of crypto-focused companies.
On M&A, management reiterated it is “patiently” pursuing acquisition targets, emphasizing the importance of regulatory approvals—particularly for corporate trust expansion in Europe—and maintaining disciplined valuation frameworks. Management said it would be “disappointed/frustrated” if certain approval processes (including an EU application through the Netherlands and FCA applications in the U.K.) are not completed by the end of the calendar year, noting typical timelines of 6–12 months.
In closing remarks, management said the company has momentum across its businesses into the second half, described the earnings guidance upgrade as modest, and reiterated a focus on consistent organic earnings growth and high returns regardless of the interest rate environment.
About Computershare (ASX:CPU)
Computershare Limited provides issuer, employee share plans and voucher, business, communication and utilities, technology, and mortgage and property rental services. The company offers issuer services that include register maintenance, corporate actions, stakeholder relationship management, corporate governance, and related services; mortgage services and property rental, including tenancy bond protection services; and employee share plans and voucher services comprising administration and related services for employee share and option plans, and childcare voucher administration services.
