The white-label home loan offering from Australian Finance Group rose 44 per cent to $4.6 billion in the first half of the financial year 2017, while settlements increased by 34 per cent.
According to the half-year financial results for the financial year 2017, the AFG Home Loans business was responsible for settling $1.24 billion of loans, representing 7.2 per cent of AFG’s total residential settlements for the period ($17.6 billion).
The aggregator said that the home loans business has seen a profit (before tax) of $4.8 million, up a massive 97 per cent from the same half in the prior financial year.
AFG managing director Brett McKeon said that “consistent growth” in its distribution network had helped generate the “strong results” for the AFG Home Loans business, along with “improved margins in the securitisation programme”.
The AFG Home loans business now has over 10,000 retail customers and four core prime mortgage funders, including Macquarie bank, Adelaide Bank and Advantedge.
Overall, AFG reported a net profit after tax (NPAT) of $13.4 million (14.2 per cent more than the same period in 2016), with the loan book sitting at $127 billion. The vast majority of this ($120 billion) was made up by residential loans.
In the last six months of 2016, residential settlements were up 1 per cent to $17.6 billion, while commercial settlements were up 5 per cent to $1.5 billion.
AFG managing director Brett McKeon noted that there was particularly strong growth in Victoria and Queensland, which was offset by weaker economic conditions in Western Australia.
Mr McKeon added that changes to lending criteria, “together with some ongoing concerns around supply”, also appear to have impacted the NSW market (which makes up 28 per cent of the residential loan book), with settlements dropping to just under $6 billion in this market.
However, the AFG MD said that there were “some signs of ongoing growth in recent numbers post the end of the calendar year”.
Speaking of the strong results, Mr McKeon said: “The HY17 result is a reflection of the company’s earnings diversification strategy with strong performance within the AFG Home Loans division being the key highlight, coupled with ongoing cost control.”
Record broker recruitment
The positive performance of the company comes in tandem with a “record year” in the recruitment of “high-performing brokers”, with broker numbers sitting at just over 2,800 at 31 December 2016.
According to the company’s figures, there was a 5 per cent increase in broker numbers between the first and second half of the financial year, as broker numbers were around 2.650 as at 30 June 2016.
There was large growth in the number of brokers working in NSW and Victoria, with the broker numbers passing 700 in NSW and 800 in Victoria for the first time.
Indeed, Mr McKeon said that the results were a testament to the company’s focus on maintaining a “strong core broking business, which continues to provide competition and choice to consumers as well as our earnings diversification strategy”.
He attributed the rise in broker numbers to the company’s “cutting-edge technology, systems, learning and development and new digital solutions”.
“Our aim from day one remains unchanged; to grow our business in order to grow our brokers’ businesses and we expect recruitment to remain strong,” he added.
Noting that the mortgage broker market penetration of the Australian mortgage market continues to grow, Mr McKeon said that consumers are increasingly recognising that “a mortgage broker is in the unique position of being able to provide a comprehensive view of the alternatives available across lenders and products”.
Touching on the recent AFG Competition Index, which shows that non-major lenders have been taking market share from the majors, the AFG managing director said the company expects “non-major bank participation to remain strong”, particularly in the shorter term.
He concluded: “Long-term growth in the market highlights the value mortgage brokers bring to the lending landscape. By providing a vital distribution network for lenders both large and small, mortgage brokers help drive competition and deliver choice to those Australians seeking to secure finance.”
[Related: White-label mortgages dominating the market]
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