AFG’s bottom line hit by Volt closure

AFG Securities direct lending settlements were up 102 per cent to $2.7 billion, with a loan book up 41 per cent to $4.8 billion. Its white label settlements were also up 36 per cent to $2.9 billion, with its loan book up 8 per cent to $8.5 billion.

In a trading update, the company said it expects a net profit (after tax) of $61.3 million, which excludes adjustments made from the Volt Bank closure and additional technology impairments.

Following the closure of Volt Bank, AFG made the move to withdraw its Volt-funded white label product, Sparc, which its brokers were piloting.

At the time, chief executive David Bailey said it was “disappointing” news as the group always looked to bring competition to the market with innovative products that fill a need.

The aggregator added, however, that its other white label offerings, such as the new Thinktank white label residential product, Align, will continue and grow and it would continue to seek new opportunities.

Volt Bank’s cessation will hit the company’s bottom line by $15 million, bringing total impairments in the financial year 2022 to approximately $21.3 million (after tax).

In addition, the company expects a $6.3 million (after tax) partial impairment of past capitalised expenditure relating to elements of the new technology platform developed prior to the acquisitions.

The group’s net profit after tax and all impairments are expected to be closer to $38.8 million.

As the technology landscape “vastly changed” since the start of the pandemic, the aggregator is focused on its technology strategy to support brokers going forward.

“Together with the acquisition of leading fintech businesses BrokerEngine and Fintelligence we have taken the opportunity to refocus our technology strategy to utilise the best of the three broker technology platforms to deliver a more flexible and efficient solution for our brokers,” Mr Bailey said.

Fixed-rate loans plummet

Given the rising rate environment, the group reported fixed-rate loans dropped almost 12 per cent in Q4 compared to the previous quarter reaching 7.7 per cent, marking the lowest recorded amount in 10 years.

However, in AFG’s fourth-quarter results in 2022, it also noted a lift in broker-written home loan applications up 2.54 per cent, picking up pace from an 11 per cent drop last quarter.

[Related: AFG confirms withdrawal of Sparc loan following Volt closure]