The mortgage aggregator has reported a stable net profit of $16.7 million, despite a 7 per cent fall in third-party-originated mortgage volumes.
Australian Finance Group (AFG) has released its 2019 half-year financial results (HY19), posting a net profit after tax (NPAT) of $16.7 million, in line with HY18.
Profit stability was reported despite a 7 per cent reduction in mortgage volumes through the third-party business, down from $18.5 billion in HY18 to $17.2 billion.
However, uptake of AFG-branded home loans via the group’s AFG Home Loans business increased by 6 per cent over the same period, rising from $1.6 billion to $1.7 billion.
Speaking to The Adviser, AFG CEO David Bailey said that while “tightness in the mortgage market” hindered growth via its third-party network, “consistent” servicing standards bolstered demand for AFG-branded products.
“[Those] making a considered credit decision even during this time are getting business and providing good service to brokers and their customers,” he said.
“That’s been the mantra for AFG Securities and AFG Home Loans products, where there’s considered credit decisions, consistent credit decisions, but also good ongoing service to both the broker and the customer.”
He added: “We think that’s taken some traction in the marketplace.”
In total, AFG’s third-party mortgage book increased to $144 billion in HY19, with its AFG Home Loans portfolio rising to $8.4 billion.
The results also revealed that AFG’s commercial settlements fell 12 per cent when compared to HY19 to $1.2 billion, with AFG’s commercial portfolio totaling $7.8 billion.
AFG Commercial volumes via its Thinktank platform totaled $36.7 million over HY19, while business lending volumes via AFG Business totaled $56.1 million.
Reflecting on the group’s overall performance, Mr Bailey lauded the strength of the group’s diversified model.
“We continue to build a strong, sustainable business despite challenging market conditions,” he said.
“AFG is delivering a diversified earnings stream, complementing our core residential and commercial aggregation business with AFG Home Loans, AFG Business and AFG Commercial Powered by Thinktank.
“More than half of our gross profit margin is now coming from diversified earnings.”