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YBR settlements drop by 2%

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Reporter 4 minute read

The brokerage has announced its results for the first half of the financial year, revealing that although profits increased by 85 per cent, loan settlements dropped by 2 per cent to $7.7 billion.

According to Yellow Brick Road Holdings Ltd (YBR), in the six months to 31 December 2017, the company reported its third successive profitable half, as net profit before tax increased to approximately $530,000. 

The brokerage said that the profit was a result of a “focused and disciplined business approach and strong cost control”, with revenue up by 5 per cent and costs down by 4 per cent. 

It follows on from several years of marked losses. Over the 2016 financial year, the group lost $99.5 million, up from the $2.6 million loss in the prior financial year. 

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Similarly to brokerage franchise group Mortgage Choice, YBR reported a rise in profit and revenue but a drop in settlements.

The company noted that settlements were down by 2 per cent in the first half of the year, which it attributed to the reduction in branch network numbers and lending curbs.

A YBR spokeswoman told The Adviser: “The marginal decrease in settlements was a result of the macro-prudential regime, coupled with a slightly reduced number of branches in the YBR network.” 

The results show that there had been a 6 per cent decline in origination revenue from lending and a 12 per cent drop in origination revenue from the wealth business. 

However, recurring revenue was up by 17 per cent, helping wealth revenue to grow by 7 per cent to $5 million. 

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The spokeswoman said: “We have focused on ensuring all of our branches are meeting our high standards for compliance and productivity, and this has impacted on branch numbers in the short term. We are proactively focused on recruitment of quality business owners and expect our footprint to return to growth going forward.” 

She added that the proportion of interest-only and investor loans had reduced as a proportion of the portfolio, in line with market trends.

Overall, the half-year results show that the company’s financial performance for the six months to 31 December 2017 included a 56 per cent increase in underlying funds under management (to $1.4 billion), a 20 per cent increase in premiums under management (to $17.6 million) and a 14 per cent increase in the underlying loan book (to $46.1 billion).

Earnings before interest, taxes, depreciation and amortisation (EBITDA) were unchanged at $2.1 million. 

The company added that it will be focusing on its training and support (which is a new revenue stream for the group, contributing $500,000 to the group in the first half of the financial year), with the introduction of the YBR Professional Development Program expecting to drive “future organic growth and new opportunities”.

[Related: New learning platform for brokers launched]

 

YBR settlements drop by 2%
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