Now I'd like to welcome Angelo Demasi, Chief Executive Officer, to begin the conference. Angelo, over to you.
Thank you very much, and good morning all. Thank you for joining us today as we release humm group's interim results for half-year ending 31 December 2025. I'm Angelo Demasi, the Group Chief Executive Officer, and joining me today is Tony Taylor, Group's Interim Chief Financial Officer. On Slide 3, you'll see the agenda that we'll run through this morning, and Tony and I will walk you through the investor pack by way of presentation as we go. We'll go through the group's performance, our strategic execution, business segment outcomes, and how we are positioned for the remainder of this financial year. Turning to Slide 5, where we've highlighted the key group performance metrics for the half, this half represents another step forward in our multi-year transformation. Despite external headwinds, our business delivered statutory profit after tax of AUD 13.9 million.
Importantly, this includes adjustments to the Forum Finance litigation provisions related to arrangements entered into between 2018 and 2021 following the recent federal court judgment and other specific items. These specific items are considered irregular in nature and are included in the calculation of statutory profit after tax in accordance with the prescribed accounting standards. I'll leave it to Tony to explain the shift to statutory accounting measures for reporting profit metrics, and he will walk you through these specific items on a later slide. Annualized statutory earnings per share was AUD 0.056 , and annualized return on equity for the half was 5.4%. As I touched on a moment ago, these metrics are impacted by irregular items. However, the underlying operational momentum remains solid across all core portfolios. For the same reason, the cost-to-income ratio was 57.4%.
I hasten to add that excluding the irregular items, the group continues to operate with improving efficiency. The cost-to-income ratio is in the 52% range if adjusted to exclude such items. The strength of our credit risk assessment, collections, and recovery processes has again been demonstrated. Credit losses remain low at 1.95% of ANR, which appears in the presentation materials as 2%. I'll discuss this in further detail later in the presentation. And finally, the perpetual notes were fully repaid in FY 2025, and consequently, there will no longer be any perpetual note dividend from the first half 2026 onwards. This, combined with the strength of our underlying results, has enabled the board to determine to pay a fully franked interim dividend of AUD 0.015 per share. I'll now move on to Slide 6, which shows our half-on-half performance through first half 2024 to first half 2026.
The top-left chart shows the growth trend of statutory profit after tax over the last five halves, highlighting our clear focus on profitable growth, credit discipline, and cost management across our core businesses over this period. While this result is up 13% on second half 2025, I do note that it is 49% down on PCP. Performance in first half 2026 is more comparable to the second half of 2025 than it is to PCP due to the impacts of the forward flow. In particular, PCP has a one-off benefit of approximately AUD 7.9 million in ECL provision release as a result of this arrangement, and Tony will walk you through this in more detail in Slides 12 and 13 shortly. The top-right chart highlights the strength of our net interest income and capability to manage NIM in the face of economic headwinds and competition.
Net interest income increased to AUD 134.4 million, with portfolio NIM stable at 5.5%, reflecting disciplined pricing and proactive management of our costs of funds. While headline yield was lower, this was fully offset by the improved funding costs and with flexicommercial. While NIM declined as we shifted toward higher-quality credit assets with lower risk premiums, this was more than offset by NIM improvements in Cards, New Zealand, and humm Ireland. You can see the output of our continued focus on the cost-to-income ratio on the bottom-left chart. Other than the irregular items mentioned previously, operating expenses reflect continued investment in capability across flexicommercial and the ongoing transformation of our consumer business. Technology stabilization and platform upgrades are progressing well, improving processes, and the overall customer experience.
As the technology upgrades roll out and we progress from our current investment phase, we expect that these associated costs will subside in future years. The final chart in the bottom right highlights our overall stable credit performance, demonstrating disciplined credit underwriting, strong customer performance, and quality of our receivables base. flexicommercial credit losses increased as anticipated, driven by the seasoning of the portfolio following successive periods prior of growth. Importantly, these elevated losses have now peaked and are expected to trend lower in the second half 2026. In consumer, net credit losses to average net receivables increased to 2.8% in the first half of 2026, primarily due to the runoff of a humm Classic portfolio. If we remove the denominator impact of that runoff, net loss to ANR remains very stable, supported by continued improvements in credit settings and collections processes.
We'll now turn to Slide 7, which shows the further details of our half-on-half credit performance, quality of our originations, and the underlying strength of our balance sheet across the period from first half 2024 to first half 2026. The charts on the bottom show the side-by-side comparison of net credit losses to ANR and the net credit loss to average AUM. Despite net loss to ANR edging up in first half 2026 to 1.95%, net credit loss to average AUM remained at 1.8%. I direct you now to slide number 8. We've introduced two new charts this half. I'll start with the chart on the right, which provides the breakdown of what we have previously referred to as our unrestricted cash balance of AUD 124.1 million at 31 December 2025.
Management operates to a minimum liquidity balance of AUD 70 million, which reflects the minimum amount of cash required to be held of liquidity under prudent liquidity risk management practices. This reflects ongoing liquidity covenant requirements under corporate debt facilities and as mandated by the group's established corporate risk appetite statement. As for the reporting date, the drawn corporate debt balance was AUD 63.6 million. Consequently, the liquidity amount net of corporate debt was AUD 6.4 million. Valuable cash is also required to be applied as working and settlement capital or strategic growth capital, as well as to meet business payment obligations or pay operating expenses such as rent, wages, and overheads throughout the month. The working and settlement capital requirement fluctuates daily due to settlement of customer loans and advances onto our group balance sheet.
Funding activities being movement of assets settled onto the balance sheet into funding vehicles and other operating expenses. Given the volatility in these movements, at least AUD 30 million is required on an ongoing basis to support these activities. Strategic growth capital is required to support near-term receivables growth, primarily in the form of capital support requirements under securitization funding structures. Cash to satisfy large pending obligations such as the foreign finance litigation outcome also needs to be provided for. Following the delivery of the judgment in that matter, AUD 19 million of available cash has been allocated and reserved for payment of this claim. The bottom-left chart shows the NTA trend over the past five halves. Broadly speaking, NTA movements are driven by capital management activities, including share buyback and repayment of perpetual notes.
Mark-to-market movements of hedging instruments, profit or loss for the period, dividend distribution to shareholders, and FX movements. You will see that our NTA grew from AUD 376.9 million in second half 2025 to AUD 413.9 million in first half 2026, an increase of AUD 37 million. This chart shows that the business is back on NTA growth trajectory after the full repayment of perpetual notes in FY 2025. This chart shows that the business is back on NTA growth trajectory. I want to emphasize that we remain committed to balancing the return to shareholders and investment in our infrastructure technology and product platforms to further improve the customer experience over time. Now to Slide 7.
Our investment focus through first half 2026 has continued to be on transforming our product platforms and modernizing our IT environment to enable growth in revenue, enhance the customer and merchant experience, and improve platform capability and efficiency.
Through the increased CapEx investment in FY 2025 and first half 2026, we have made good progress in executing our transformation strategy. humm loan is operational, and we have materially improved key credit and technology performance metrics following launch challenges in June 2025. As previously communicated, we have now turned our attention to the implementation of a new Cards product platform, which commenced in the first half of 2026. Implementation of our new modern data platform is well underway, enabling us to better leverage our significant data resources and unlock value through our AI initiatives across the business. We are now well advanced in the modernization of our IT environment, driving a simpler, lower-cost, and more resilient technology foundation.
As part of this program, we have retired more than 1,170 servers, equivalent to approximately 75% of our total fleet, and we are decommissioning our remaining physical data centers as we complete our migration to the cloud. This transition is delivering material benefits: reduced infrastructure and operating costs, a strengthened security posture, and significantly improved resilience, including 99.9% availability across our cloud-hosted product systems. These improvements position us to scale more efficiently while supporting a more reliable experience for our users. Moving to slide 10. These improvements position us to scale more efficiently while. Our global expansion investment strategy continued to deliver positive returns in the first half of 2026, supported by a balanced and sustainable growth trajectory across our key international markets as we head into the second half.
Starting with Ireland, the business delivered an excellent result, generating a profit of AUD 6.9 million, which is up 103% on PCP. This was driven by strong volume growth and a 250 basis points improvement in gross interest yield compared to PCP, and reflects both disciplined portfolio management together with strong customer demand. Turning to the U.K., we are pleased with the momentum we're seeing. Volumes in the first half of 2026 were up 56%, and interest income increased by 100% versus PCP. This growth reflects our deliberate strategy to follow our successful Irish merchants into the U.K., focusing on verticals where we have deep expertise and longstanding relationships. The early traction continues to validate that very approach. Across both markets, we see significant runway for growth.
Together, they provide access to a retail finance market of more than AUD 80 billion, and we believe we are well positioned to capture share by leveraging our digital platforms, our highly regarded servicing model, and our strong merchant partnerships, all of which remain clear and competitive advantages. In Canada, as we communicated previously, the operating model reset has now been completed. As a result, we have delivered AUD 1.7 million of cost reductions in first half 2026 on PCP. These related to operating model changes and are inclusive of the associated restructuring costs borne in this half, and management will continue to monitor performance and adjust settings as appropriate. Reasonably across the group, our global profit continues to show consistent improvement.
humm's global statutory profit after tax has progressed from an AUD 3.4 million loss in first half 2025 to an AUD 1.1 million profit in second half 2025, and further to an AUD 2.1 million statutory profit in first half of 2026. This steady uplift reflects disciplined execution, targeted investment, and an increasingly efficient operating model. Overall, the international portfolio is performing well, and we remain confident in the strategic opportunities ahead. I'll now invite Tony to speak to you in more detail about our financial and strategic opportunities ahead.
Thanks, Angelo, and good morning all. I'll now invite Tony to speak to you in more detail about our financial and strategic tax results, as well as the underlying performance drivers that supported the business in first half 2026. Firstly, during the half, we shifted external reporting to statutory accounting measures for reporting profit metrics. Historically, cash-based metrics have been used.
However, differing definitions can make comparisons challenging for the market. By focusing on Stat profit, we provide a clearer, more consistent view of performance relative to both our own history and our peers. So I'll now turn to the metrics on slide 12. Our statutory profit for the half year is AUD 13.9 million. Compared to the second half 2025, Stat profit after tax is up 13%, supported by the absence of intangible impairments during the period which impacted the prior period, partially offset by adjustments to the foreign finance litigation provision that Angelo already referred to. STI and LTI true up in second half 2025 upon departure of the former CEO and other executives, and assessment of STI/LTI hurdles also happened. This result is 49.1% down on PCP.
However, reflecting the anticipated higher credit losses in commercial as a result of portfolio seasoning, the absence of prior period benefit of the AUD 7.9 million ECL provision released following the initial forward flow receivables sale, and the higher irregular items referred to just now, including the increase in the foreign finance litigation provision following the recent federal court judgment, our growth metrics remain stable despite broader pressures on receivables growth across the economies in which we operate federal court judgment. Ending the half year with assets under management of AUD 5.4 billion, this reflects a continued growth in flexicommercial receivables, partially offset by softness in humm AU and a negative FX impact from New Zealand.
If we were to adjust the first half 2026 using the FX rate from the PCP, we would see an uplift of AUD 42.7 million against PCP or AUD 63.7 million using the second half 2025 FX rate.
Group NIM was 5.5% in the first half 2026, holding stable relative to prior periods. This reflects disciplined pricing, sound credit processes, and the ability to drive cost-of-funds improvements by taking advantage of more favorable credit spreads into funding markets. Net interest income increased to AUD 134.4 million, supported by this stability in NIM and proactive management of our cost-of-funds. While headline yield moderated in this half, this was fully offset by lower funding costs. Within flexicommercial, NIM softened as we continued to shift the portfolio toward higher-quality credit assets with lower-risk premiums. However, this shift was more than offset by improved yields and NIM in Cards New Zealand and humm Ireland, which continue to generate attractive returns. Overall, the portfolio continued to deliver New Zealand margin, underpinned by disciplined pricing, improved funding costs, and positive offshore performance. Net operating income is up 2.6% on PCP, mainly driven by NIM.
Fee and other income reduced due to changes in portfolio mix and softer consumer origination. It is also important to note, though, that movements in fee and other income, as well as cost of origination, largely reflect the impact of the forward flow arrangement, where net interest income has been replaced with fee income. Origination fee reimbursement and cost of origination are also recognized upfront with each forward flow receivables starting to be replaced with fee income. I'll now turn to Slide 13, which was introduced last year as a supplementary information slide to provide additional transparency into the underlying performance of the business. Noting there were a number of specific items in the first half 2026 comprising adjustment to the provision for the foreign finance litigation, duplicate system costs and consumer incurred to maintain or remediate the legacy systems alongside our new systems implementations.
0.08 million of legal costs incurred in responding to an ASIC inquiry and a further half of the associated remediation costs, and AUD 2 million release of an onerous contract provision following the renegotiation and renewal of a key supplier agreement. The negative impact also of an AUD 800,000 due to unfavorable New Zealand dollar foreign exchange movement impacted the half as well. Slide 14, commercial. I'll now look at the performance of each of the business segments, beginning with, obviously, flexicommercial led by Brendan White. This slide shows statutory profit after tax for flexicommercial: AUD 13.4 million in the first half 2026, down 11.8% on the second half 2025, and down 52.8% on PCP.
Commercial performance in first half 2026 is more comparable to the second half 2025 than PCP, reflecting the timing and scale of the initial forward flow receivables sale and portfolio seeding, which resulted in elevated net losses in the second half 2025 and first half 2026, but not in the PCP itself. Compared to second half 2025, the lower profit reflected improved net interest income, credit losses as the portfolio seasons, and the continued investment in capability and technology uplift. The commercial portfolio is maturing up three years of strong growth and continues to increase assets under management in an SME market showing early signs of recovery amidst rising competition. Performance remains resilient, underpinned by disciplined underwriting standards and market-leading broker networks.
The team continues to expand across geographies into rural and regional Australia and progressing new products such as Flexi Premium and Flexi Ag, as anticipated and communicated to the market previously. flexicommercial recorded elevated losses in the first half 2026 due to the seasoning of the portfolio and losses associated with FY 2023 vintages. Despite the dollar increase, the net loss to ANR over the past two and a half years remained within the targeted 1%-1.1% range, which are industry-leading for an equipment finance portfolio. The year-on-year increase in losses reflects the growth of AUD 1.6 billion in the receivables book between FY 2022 and financial year 2025, with losses taking 12-18 months to flow through the billion. The return of supply chains and the normalization of the secondary market, which has driven down secondary pricing. We expect losses to normalise over the remainder of the year.
We move to Slide 15, consumer finance, led by the consumer business led by Jacqui Hourigan, Emma Skondras, and PJ Byrne. The consumer business delivered a statutory profit after tax of AUD 14.3 million, up 76.5% on PCP, and up 180.4% on the second half 2025. This was driven by strong performance in the humm Ireland and Cards New Zealand businesses. Volumes were AUD 1.1 billion first half 2026, down 13.1% on PCP, but a smaller reduction of 5.5% against the second half 2025.
Closing loans and advances were AUD 2 billion, down 5.1% on PCP, driven by the reduction in the humm Australia portfolio and impacted by the weaker New Zealand dollar. New Zealand Cards, despite macroeconomic challenges and a weakening New Zealand dollar, Cards New Zealand delivered a statutory profit after tax of AUD 8 million, an increase of 35.6% on PCP, and 53.8% on the second half 2025.
The result was underpinned by 11.8% volume growth in the core acquiring Mastercard portfolio, outperforming the broader market and demonstrating the strength of our brands and our merchant relationships in New Zealand. Cards New Zealand volumes grew to 458.5 million, up 2.4% on PCP, while closing loans and advances declined 3.4% on PCP due to currency impacts. This growth saw our market share in New Zealand credit cards rise to 8.45% this quarter, and we remain the market leader in New Zealand card issuance, capturing 31% of newly issued cards. Net credit losses to ANR increased slightly to 3.6%, reflecting tougher market conditions. Australia Cards delivered a statutory profit after tax of AUD 3.1 million, down 16.2% on PCP, and 13.9% second half 2025, driven by higher operating costs associated related to the ASIC inquiry.
The portfolio continued to benefit from tightening of credit settings, which helped reduce the net credit losses to 21.1% or AUD 1.2 million on PCP, bringing net credit loss to ANR to 2.4% in the first half 2026. Volume of AUD 252.9 million increased 1% on PCP as management deliberately moderated new customer acquisition while focusing on strengthening spend volumes for existing customers. Statutory profit after tax for the point-of-sale payment plans was AUD 3.2 million, driven by a AUD 1.1 million contribution from humm Australia, AUD 6.9 million contribution from humm Ireland, partially offset by AUD 4.8 million of investment in humm U.K. and humm Canada. Volumes were AUD 369 million, down 32.3% on PCP, reflecting the run-off of the humm Classic product and launch-related technology issues with 369 million, partly offset by strong growth in humm Ireland and the U.K.
humm Australia has materially improved key credit technology metrics following the launch challenges in June 2025, and the business has a defined pathway to re-engage customers and merchants in the coming months. Across our international portfolio, performance improved from an AUD 3.4 million statutory loss after tax in the first half 2025 to an AUD 1.1 million statutory profit in the second half 2025 and an AUD 2.1 million statutory profit in the first half 2026. humm Ireland continues to outperform across key metrics, and humm U.K. is delivering comparable yields on its growing portfolio. In humm Canada, the strategic reset has delivered a 33.3% reduction in costs on PCP. If I next turn to the next slide, corporate segment, the group introduced a corporate reporting segment in June 2025. As a result, first half 2025 has been restated with no impact on humm group's consolidated result.
The higher corporate segment loss in the first half 2026 was driven by several irregular factors, including the legal and regulatory expenses and high provision for the foreign finance litigation following the recent federal court ruling, partially offset release of the owner's contract provision following renegotiation of a key supplier agreement. We take all of the one-offs through the corporate segment. Credit risk management on Slide 17, we take all of the annualized net loss to ANR for the group, which excludes assets sold into the forward flow program, increased from 1.8% to 2%. Annualized net loss to ANR, 1.95% without rounding, as Angelo mentioned earlier, just reflects the natural seasoning of the commercial portfolio.
In commercial, the net loss to ANR increased from 0.9% in PCP to 1.3% in the first half 2026, in line with expectations and consistent with what we communicated to the market in our Q1 update. For the full year 2026, we expect this ratio to normalize and trend back towards 1.2%. The increase was concentrated within a small segment of the portfolio originated in FY 2023, noting that multiple credit policy changes since that time have strengthened originating quality. Losses were also impacted by return to more normalised asset recovery rates and by the forward flow execution, which removed AUD 680 million of early-stage loans from the book. In consumer, net loss to ANR increased by 30 basis points to 2.6% against PCP, primarily due to the run-off of the humm Classic portfolio.
Adjusting for the denominator effect, underlying loss performance remains very stable, supported by tightening of credit settings and ongoing enhancements in collection processes. Cards New Zealand saw only a 15 basis points increase in loss rates. Despite the challenging economic conditions, Cards Australia improved loss performance by 35 basis points, reflecting the benefits of score card optimization executed in recent years. The two charts at the bottom of this slide highlight the depth of the uplift in origination score quality across both our commercial and consumer portfolios in Australia and New Zealand over the past 18 months. Based on this trend, we remain confident of further improvements in credit loss performance moving forward. Our balance sheet provision coverage remains strong at 2.5%, around 50 basis points above actual losses, providing a solid buffer against future risk.
We continue to hold a 2% provision against the commercial portfolio, still above the current loss rate, providing a solid buffer against future risk. Our funding platform remains well-diversified with warehouse funding structures. I'm referring to slide 18 at the moment. Private and public term transactions alongside our forward flow arrangement and corporate debt facilities to manage capital given in many avenues fund our business. We continue to be well-supported by leading domestic and international banks and local and offshore credit investors. During the half, commercial business focused on positioning for future growth, while the consumer funding platform saw incremental improvements from execution of funding activities, which improved costs of funds for those businesses, including our New Zealand Dollar 247 public issuance under our Q Card Master Trust program. This was executed with very favorable prices.
This funding optimisation continues in U.K. and Ireland with further improvements in the process of being executed to drive cost savings and accommodate the expected growth. If I look at the bottom right chart, our original forward flow arrangement provided capacity to fund up to AUD 1 billion of assets, of which AUD 680 million was utilised before the availability period expired in October 2025. In January 2026, the group executed a new forward flow program with AUD 500 million of capacity expired in October. The forward flow program has delivered the financial outcomes consistent with its expectations.
As previously communicated, the benefits of this arrangement include increased capacity for capital-like growth in commercial without the need to raise significant equity capital, return on equity acquisition, yes, the facility groups raise fee income without equity, diversification of our funding platform to protect the business in the event of disclosure of term markets, and it allows us to continue to originate. And finally, we see an opportunity to expand this program to other asset classes. I would thank you for your time, and I will now hand back to Angelo to close the presentation. Expand this program to other asset classes.
Thank you, Tony. And I'll move to some closing remarks, which you'll find on slide number 20. Firstly, we have continued to build upon very strong foundations. We feel that our portfolio remains resilient with sound asset quality generated from disciplined risk settings.
We continue to operate with solid liquidity and funding strength, and importantly, we remain well-capitalized. We're well-diversified across customers, brokers, merchants, partners, products, assets, and geographies, and also funding sources. These factors have allowed us to maintain quality originations in the current environment and underpin our strategy to pursue sustainable growth. Secondly, we are seeing clear momentum building on our solid foundations. We're seeing promising growth momentum across some of the portfolios, while our technology and platform transformation, which is progressing well, will drive simplification and efficiency across remaining portfolios. These initiatives will continue to enhance broker, merchant, and customer experience and help us to achieve greater scale. Thirdly, we feel that the outlook is improving. Selected commercial losses have peaked, and we are expected to normalise through the second half. We remain disciplined on cost management while continuing to invest carefully in our end-to-end technology platforms.
The new humm loan product is expected to expand on its merchant offerings and support improved profitability over the medium term. We continue to work closely with merchants and other partners on initiatives to drive uptake and capture new market opportunities. We're optimistic about the prospects for the global businesses and have confidence that they will continue on their growth journey. While I acknowledge that there are corporate activities playing out, these three points do provide a strong sense of confidence in the future. Finally, I'd like to express my thanks to all of our staff for their continued efforts, to the board, for the strong sense of confidence in the future. Of course, to our shareholders for their confidence in management. Finally, I'd like to express my thanks to all of our staff.
All right, but thank you for joining us today, and we'll now open the line for questions, which we've been receiving online. Of course, to our shareholders for their confidence in management.
All right, but thank you for joining us today. We will now begin the Q&A session. Questions may be submitted online via the webcast platform by clicking the blue hand at the top right of your screen. Today, of the large volume of questions I received, we will endeavor to answer as many questions as time allows. Again, to submit your questions, please click the blue hand at the top right of the webcast, and I will hand over to the team to address any questions received. Again, to submit your questions, please click the blue hand at the top right of the webcast, and I will hand over to the team to address any questions received.
Thank you. Originations in commercial were down 10%, but that seemed to improve in December quarter. Can you discuss the cause of improvement and how you were seeing current trading?
Originations in commercial were down 10%, and that's correct. Generally speaking, the beginning of the first quarter for us in flexicommercial is slower, and this is really a seasonal trend. Thanks for the question. It is true, however, that in Q2 we have been seeing early signs of improvement. It is also correct to say that we had an extremely strong second quarter with some of the highest volumes we've seen on record. This was supported by a renegotiated funding facility, which gave us increased confidence to drive volumes harder throughout that second quarter.
On the last point of the question, despite the continued competition, we do feel good about the volume momentum that we take into the second half of fiscal 2026. Despite the continued competition, we do feel good about the volume momentu m that we take into the second half of fiscal 2026.
Okay. Next question. Why did humm decide to increase the dividend to AUD 0.015?
Again, thank you for the question. Okay. Next question. As a result of having paid down the perpetual note in FY 2025, the group now has an increased capacity to pay our dividend. Pay our dividend. In FY 2025, you might recall that we paid approximately AUD 7.7 million according to that perpetual note dividend. So that capacity now comes back to us and has allowed the board to increase the dividend by AUD 0.0075 in this period.
I also want to advise everybody that that fully frank dividend does maintain itself within our payout ratio, albeit up to the upper end of that payout ratio. The board has agreed and determined to initiate a capital management strategy and review, and that will also include our target dividend ratio for future periods.
Next question. Will the Canada cost savings have a more pronounced impact in second half 2026?
The short answer is, they very well might. Cost savings have a more pronounced impact. One thing taking into consideration, and I did mention it earlier in my remarks, is that the AUD 1.7 million improvement in first half on a PCP basis was inclusive of a number of restructuring costs that were borne in this exact period.
So we do expect that first half, as we go into the second half. But please just be aware that any remaining restructuring costs that we need to bear will be taken in the second half as well. So I'd say the short answer is yes, it's likely to improve. At this stage, we are certainly looking to hold the AUD 4.4 million cost restructuring exercise that was conducted in fiscal 2025. At this stage, we are certainly looking to hold the AUD 4.4 million cost restructuring exercise that was conducted in fiscal 2025.
Next question. Can you please give more detail on the IT system conversion timeframes remaining, risks as you see them, and potential costs remaining both from an OPEX and CAPEX perspective? Can you please give more detail on the IT system conversion timeframes remaining?
Thank you again for the question. There's a few components with.
On an overall basis, we're really pleased with the progress that we're making. I'll go through each of the major investments really briefly, just to give you a sense of where I think that we're at. On the humm loan product, we now consider that implemented and operational, and we're now in the mode of making enhancements that will drive future cash flows against the product as we hold it as an asset on our balance sheet. In terms of the card transformation, that implementation has only started in the first half of fiscal 2026, and we expect it will take the best part of 12 months. Please note, though, that once that product platform is developed, we'll need to undertake a migration of customer cards in both Australia and New Zealand, and that will follow the implementation, which I'd note is approximately 12 months.
On our infrastructure modernization and security improvements, we are very well-progressed. We have now migrated out of 2 physical data centers, and we're on the precipice of migrating out of a third. Once that's done, that will only leave 1 data center, and we expect that we'll be out of that data center and fully modernized into the. By the end of August this calendar year. In terms of ongoing costs, we would guide that the capitalization costs for the second half will be in line with or maybe slightly higher than the first half, but not too far distant from fiscal 2025. And then we'd guide that as we go through fiscal 2027, probably more towards the second half of fiscal 2027, that the transformation costs are likely to start subsiding.
In terms of risks, which is the last part of that question, as with all transformation programs, the risks are always present. We feel confident about the product structures, and we feel confident about the decisions of our suppliers and partners as we execute on these transformation programs. What I would be looking to the team here at humm to keep a really keen focus and a keen eye on activities in our change management activities. And if I were to go back to the launch of the humm loan platform. Really keen. 2025, as a result of the accelerated timelines that we had to operate on, I'd propose that that is where we probably could have done better. But in the remainder of the transformation program, and specifically in relation to the cards transformation, the timelines are of our making.
They're not regulatory set, and so I feel comfortable that we have more time to make good decisions so that we can avoid and mitigate any of those risks that we've seen in the past. I feel comfortable that we have more time to make good decisions.
humm guided to an AUD 7.8 million impact in humm AU, how was that manifest in the half given at humm AU's stat profit of AUD 1.1 million? humm guided to an AUD 7.8 million impact in humm AU. Thanks, Tony. I'll put this question to you, please. How was that manifest in the half given at humm AU's stat profit of AUD 1.1 million?
The impact was the slower-than-expected take-up of the humm loan by the new regulation and more to related tech issues. As a consequence of that, we saw a slower start of the year. So the humm loan by the new regulation. That impacts the first half 2026 profit. We saw a slower start of the year. We're seeing that improve, obviously, in the last three months, four months. Growth is coming back there. Somewhat. We're seeing that improve, obviously, in the last three months. Growth is coming back. That's it. There's no further questions.
Thank you, Tony, and thank you to everybody for the questions submitted online. We'll now pass back to the moderator if there are no more questions coming through. Thank you, Tony, and thank you to everybody for the questions.
This is the last call for any questions. Please make sure you submit them via the blue hand at the top of your screen. That does conclude today's conference call. Thank you for joining us. You may now disconnect.