Yellow Brick Road has reported a fall in mortgage settlements over the three months to 31 March but managed to grow its group loans under management in tough market conditions.
In a trading update, YBR revealed that overall settlements came in at $3.7 billion, 8 per cent lower than Q3 FY2016 and driven by tough lending market conditions compared to the prior corresponding period. Meanwhile, group loans under management grew 19 per cent to $42.5 billion.
“Recent initiatives by regulators seeking to limit the volume of certain types of lending, including investment loans and interest-only loans, have affected the lending market,” the company said.
“The company has seen lower than expected lending volumes as a result of the changes. To date the reduction has not been sufficient to materially affect the company’s ability to continue to meet market expectations (a FY2017 full year profit).”
YBR noted that it has been unable to quantify the medium-term impact of the changes on lending volumes.
The group flagged that the net value of its future lending trail income receivable (Loan Book Embedded Value), which is independently assessed in conjunction with the preparation of the company’s Audited Annual Financial Statements, may be affected by the recent changes in the lending market.
“Any re-valuation would have an impact, either positive or negative, on FY2017 profit. At this stage the company, does not anticipate any change in valuation inputs or methodology. If the company becomes aware of any material changes it will advise the market immediately,” it said.
One the YBR’s key operational priorities over the quarter has been recruitment, where it says new advertising has “doubled lead flow and quality”. As a result, 80 per cent of new recruits now have significant broking or financial planning experience.
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