A leading aggregator has seen significant growth in its white-label offering over the year to 30 June with branded mortgages adding $6.6m profit to the group in FY16.
ASX-listed aggregator AFG yesterday announced a net profit after tax of $22.6 million, up 15.1 per cent on the group’s prospectus forecast.
Residential settlements were up $8.3 billion on FY15 while commercial settlements surged 15 per cent to $2.76 billion.
AFG now boasts a commercial loan book of $5.7 billion and a residential book valued at $114.7 billion. As at 30 June, the group has a combined residential and commercial loan book of $120.4 billion, up 12.6 per cent on the prior period.
“Over the last five years, settlements have nearly doubled in residential, with a similar result in the commercial business,” AFG managing director Brett McKeon said.
“In residential, as you would expect, we are seeing Victoria and NSW lead the way. The portfolio grew across all states. NSW is now our number one market place. Queensland is holding on at number two but Victoria will soon overtake it.”
AFG Home Loans, the aggregator’s branded offering, was a standout performer over the last 12 months and achieved considerable growth.
“We have seen consistent growth in our distribution network, together with delivery of our strategy, has helped deliver a great result for AFG Home Loans,” Mr McKeon said. “Settlements are up 99 per cent to nearly $2 billion on our branded products.”
Mr McKeon highlighted that the momentum of AFG Home Loans in the first half of 2016 has continued to be maintained.
AFG Home Loans Edge settlements were $1.33 billion over the year to 30 June, up from $460 million in FY15.
The group’s The Icon product launched in October 2015 has provided alternative product and funding lines for the aggregator’s white-label offering. The new product is gaining traction in the marketplace with $314 million in lodgements to 30 June.
Mr McKeon said the AFG Home Loans business maintains the group’s objective of having multiple funders, one of its core strategies.
“Our own AFG Home Loans business also outperformed internal expectations. From a prospectus forecast of $1.30 billion in settlements of white label products, we rounded out the financial year at $1.44 billion. This was driven by the move from a soft launch to full roll out of our Edge product, and the more recent addition of the new Icon home loan,” he said.
“These have been well-received by our broker network with the products delivering more choice, competitive pricing and excellent service to our brokers and their customers.”
He added that the positive results are a testament to the company’s focus on its broking business and earnings diversification strategy.
“AFG’s network of brokers provide a vital distribution network delivering greater choice and market competition for consumers and businesses. With broker market penetration of the Australian mortgage market now at more than 52 per cent, AFG continues to be systematically important to the Australian banking system.”
[Related: AFG launches new white-label offering]
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James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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