An ASX-listed mortgage group has revealed that it is looking to expand its broker presence, with capacity to increase its broker franchise footprint from 425 to 594 in the near future.
Speaking at the release of the company’s preliminary half-year results, Mortgage Choice CEO John Flavell said that the number of franchises had grown by approximately 2 per cent on the previous half, and that it had plans to expand further.
When asked by The Adviser how the company plans to achieve this, Mr Flavell said: “We have capacity in the network, based on our market share across our marketing areas across the country, to grow to 594 franchises if we are of a mind to, and we are of a mind to.
“In as far as what we have done to deliver that, we have established a focused growth team that measures the performance of that growth in terms of net recruitment numbers but also productivity of those new franchisees and loan writers as they come into the network.”
The Mortgage Choice CEO added: “We built a strong result for the first half and most pleasingly we have a very strong pipeline for this next half both in terms of franchisees and loan writer numbers. We're buoyed by the outcomes that the present activities are actually delivering and we will continue those activities as those are continuing to deliver results.”
Indeed, Mr Flavell said that, as far as recruitment of new franchises to the network it had been “the strongest half that [it has] had in terms of franchise recruitment for many, many years… eclipsing the total number of franchises that were accredited for the whole financial year 2016.”
He said that the company opened a new retail shop front once every other week in the half (with 13 new retail shopfronts) and had a “solid pipeline of new retail shopfronts to come online in this next half as well”
Mr Flavell told The Adviser: “We haven’t got a specific time frame [to reach the 594 figure] but we grew the net number of franchisees by 2 per cent in the first half and if we can maintain the 2 per cent trajectory for every single half consistently then I don’t think that’s a bad outcome at all.”
The preliminary half-year results for the year ending 31 December 2016 shows that the company settled a record $6.4 billion of loans in the half year ending December 2016, up 2.4 per cent on the prior comparative period.
Loan book growth outstripped settlement growth at 3.3 per cent, with the loan book reaching $52.4 billion at 31 Dec compared to $50.7 billion in the same period the year before.
Mr Flavell said that home loan approvals were, on a monthly basis, holding at or about $33 billion a month.
The results also showed that the financial planning business delivered profit in the half for the first time, helping the overall company reach a net profit after tax (NPAT) on a cash basis of $11.7 million (up 16.2 per cent on the first half in 2016).
The Mortgage Choice CEO said that the overall figures marked the ‘best ever’ interim financial result for the company and that a record interim dividend of 8.5 cents per share was declared by the board, up from 8 cents in the previous comparative period.
Mr Flavell commented: “Our network of mortgage brokers understands the value of providing their customers with access to professional financial advice. As a result, a larger proportion of our customers’ wealth needs are now being met.”
He added that the continued growth in financial planning revenue, combined with the ongoing strength of the underlying core broking business, ultimately helped the company to drive the strong cash NPAT result.
“This strong result also confirmed that the group’s decision to close the loss-making Help Me Choose business in 1H16 was a sound one,” he said.
Mr Flavell concluded: “We have started the 2017 calendar year off strongly, with growth in the network, growth in home loan applications, growth in the number of referrals going to our financial advisers, increased momentum in Mortgage Choice Asset Finance, and a continued focus on investing for the future whilst prudently managing operating expenses.
“We look forward to continuing to deliver strong results and addressing the market again at financial year’s end.”
[Related: Major brokerage faces big challenges: report]
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