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Bright results for non-banks despite tough mortgage market

Staff Reporter 2 minute read

While battered international institutions flag losses amid global market turbulence, February revealed positive results for some domestic mortgage businesses.

With listed companies due to report their first half earnings for the financial year 2007/08 to shareholders, a number of encouraging results have emerged.

RHG Limited yesterday announced a half year profit of $22.6 million. Consolidated profit after income tax for the group was $113.8 million, which included a profit of $103.3 million after tax from last year’s sale of the RAMS brand and origination business to Westpac.

RHG chief executive Glenn Goddard said RHG’s mortgages continued to perform in line with expectations, with arrears in line with market peers.

Non-bank lender Homeloans Ltd this week reported a half year net profit of $2.269 million – an astounding increase of 230 per cent on the restated prior corresponding period.

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Homeloans Ltd’s mortgages under management now exceed $6 billion.

The lender’s managing director Brian Jones attributed the strong results to the strengthening of distribution, staff and networks over the past few years.

“Homeloans Ltd has significantly increased its distribution network through acquisition and reinforcing its position as a leading supporter of the third-party channel,” Mr Jones said.

“The increased revenue, with a lower increase in the operating cost base, again demonstrates the leverage ability and scale benefits that our business model possesses.”

Franchise brokerage Mortgage Choice also announced a record net profit for the half year ending 31 December of $10.6 million.

The brokerage generated $5.9 billion in housing loan approvals during the six month period; its loan book now stands at $31.6 billion – up 14 per cent from the same period in 2006.

“The result is particularly pleasing considered against a backdrop of the US sub-prime situation, a federal election in November and two cash rate rises in August and November 2007, as well as further rises by lenders,” said managing director of Mortgage Choice Paul Lahiff.

Positive results were also posted by a number of mutuals.

The Rock Building Society reported a net profit after tax of $2.27 million, while the Australian Central Credit Union (ACCU) tabled a 12.4 per cent increase in total revenue to $115.9 million. Wide Bay Australia announced an after tax profit of $8.23 million.

Published: 27-02-08

Bright results for non-banks despite tough mortgage market
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