Investment management firm Challenger is focused on growing its life and funds management arms after disposing of its under-performing banking business.

Earlier this month the listed company announced an agreement to sell Challenger Bank for about $36 million to New Zealand’s Heartland Group, subject to regulatory approval. The sale follows a strategic review undertaken by Challenger on the future of the bank, which incurred $12 million in normalised pre-tax loss in the last financial year.

CEO Nick Hamilton said “a sale was the best option for Challenger”.

“This decision will allow us to focus on our Life and Funds Management businesses and leverage the scale we can achieve through strategic partnerships,” Mr Hamilton told shareholders at the annual general meeting (AGM) last week.

“Importantly, our Life and Funds Management businesses are performing well and provide significant scope for growth. The decisions we have made this year are about setting our business up for long-term success.”

Challenger’s life business performed strongly in the last financial year, achieving an 18.4% rise in normalised earnings before interest and tax to $472.3 million from the prior corresponding 12-month period.

Life sales grew 40% to $9.7 billion from a year earlier, including a 12% rise in annuity sales to $5.1 billion.

“Our Life business is Australia’s leading retirement income brand and plays an important role delivering customers with reliable and secure income streams and the financial peace of mind that comes with this,” Mr Hamilton told shareholders during the AGM.