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Shares in Challenger Financial have plummeted to a three-year low after the retirement fund manager flagged a 97 per cent plunge in first-half profit and cut its full-year guidance.

Challenger on Wednesday said it expects a first-half statutory profit of just $6 million compared to $195 million a year ago, largely because of poorly performing equity markets and policy liabilities in its life division.

Its shares fell 15 per cent in the first 15 minutes of trade and were worth $7.855, down about 44 per cent on the same time last year.

That’s the lowest they’ve been since March 2016.

Normalised net profit, which strips out one-off items, is expected to fall about two per cent to $270 million when Challenger announces its first-half results on February 12.

Challenger has reduced its full-year normalised profit guidance to between $545 million and $565 million, down from between $590 million and $612 million.

Nonetheless, chief executive Richard Howes said he remained very positive about the future despite challenging conditions.

‘Challenger has a strong track record of success through the cycle, which gives me confidence in our performance over the longer term,’ Mr Howes said in a statement to the ASX.

‘We continue to be well placed to take advantage of growth in the retirement income market.