The major aggregator has upgraded its net profit expectations for 2017 by nearly 45 per cent following changes to how trail revenues on its white-label mortgages are measured.
In a trading update today, AFG released a profit upgrade, indicating a net profit after tax (NPAT) for the 2017 financial year of between $37.0 and $37.8 million. Previously, the forecast NPAT was $25.5 million.
The profit upgrade follows the adoption of an actuarial model to estimate future trail revenue for the AFG Home Loans (AFGHLs) white-label mortgage products.
The branded home loans had “matured” enough over the six months to June 2017 to provide sufficient history and data, AFG explained.
“The AFGHLs business continues to be a driver of ongoing earnings growth and this revenue recognition provides evidence of the value this segment of the business is generating for the group,” it said.
[Related: AFG appoints chief executive officer]