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Non-bank lender reports 60% profit increase in FY18

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Reporter 2 minute read

Homeloans Ltd has reported a 60.1 per cent increase in statutory net profit after tax in the 2018 financial year, despite being impacted by funding pressures.

The publicly listed non-bank lender booked a statutory NPAT of $25.3 million for the 12 months ending on 30 June 2018, representing an increase of 60.1 per cent from $15.8 million reported in the previous financial year.

According to its disclosure to the Australian Securities Exchange (ASX), principally funded settlements grew by 38.5 per cent over the year from $2.6 billion in FY17 to $3.6 billion in FY18, while principally funded assets under management rose by 30.3 per cent from $6.6 billion to $8.6 billion.

The third-party channel accounted for 86.1 per cent of settlements, or $3.1 billion, with the direct channel accounting for the remaining 13.9 per cent or $500 million.

Prime loans accounted for 75 per cent of settlements, or $2.7 billion, with specialist loans accounting for the remaining 25 per cent, or $900 million.

Incoming fees and commissions totalled $35.9 million in FY18, while outgoing fees and commissions amounted to $40.5 million. These figures were $32.1 million and $31.1 million in FY17, respectively.

Homeloans has reported surpassing 50,000 customers.

The lender admitted in its ASX disclosure that, like other Australian lenders, it had been affected by rising funding costs.

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It said: “As with a number of our industry peers, we have been impacted by the dislocation of the BBSW against the overnight indexed swap rates. As we have a largely floating rate book (98 per cent), we have passed on the additional funding costs in our front and back book to the extent we could within market pressures.”

While the lender acknowledged that brokers are a popular choice among borrowers, it also noted the increase in customer preference for online and phone as channels of mortgage research.

As such, Homeloans said that “an omni-channel approach allowing seamless movement between channels is now an expectation” among customers, with many preferring to use multiple channels when making enquiries.

It reported in its investor presentation that 40 per cent of customers said they used the broker channel to make enquiries in the last year, 27 per cent researched online, 26 per cent went to branches, 20 per cent used their phones and 12 per cent went to a mobile lender.

Homeloans’ strategic priorities moving forward include the specialist lending segment, multichannel distribution, workflow automation, digital capability enhancement and investor base expansion with a special focus on Asian investors.

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Days before reporting its full-year financial results, the non-bank lender announced the retirement of chairman Robert Scott, who served from 2014 to 2017, effective upon the conclusion of Homeloans’ annual general meeting on 26 November.

The lender also entered into a strategic partnership with Macquarie-backed fintech Athena Home Loans, founded by former NAB executives Nathan Walsh and Michael Starkey.

Under the partnership, Homeloans will license part of Athena’s platform and provide the fintech with funding support as well as $2 million in equity investment.

[Related: Homeloans chairman to step down from board]

Non-bank lender reports 60% profit increase in FY18
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