Brokers delivering 'competition and choice'
AFG Securities, the non-banking lending wing of mortgage aggregator AFG, saw its loan book surge 23% year on year to a record $5.1 billion as of 31 December, according to a first-half earnings report.
Despite the loan book growth, profit generated from AFG’s lending activities (detailed under ‘manufacturing’ on the balance sheet) fell from $8.6 million in the previous first half to $8.4 million this half.
These results include AFG’s 32% stake in residential and commercial lender Thinktank’s $6.4 billion loan book.
Thinktank’s earnings contribution declined by 73%, according to the results, as lower net interest margins (NIMs) affected trading results.
However, AFG chief executive David Bailey (pictured) said: “We expect Thinktank will also benefit from changes in the cash rate cycle.”
“Signs towards the end of the 2024 financial year indicated more favourable lending conditions were returning, and we have built from there,” said Bailey. “We are delighted with the growth driven by our lending products, which have truly resonated with both our brokers and their customers.”
AFG’s core aggregation business (under ‘distribution’ on the balance sheet) grew 8% year on year. Profit increased to nearly $29 million from less than $27 million in last year’s first half. This segment includes AFG’s white label mortgage products, AFG Home Loans.
Total brokers on the aggregator hit a record 4,100, with record settlements of $31.8 billion logged.
“AFG’s powerful distribution network, with stable earnings enabling capital-light growth provides a platform for further positive expansion in the coming years,” said Bailey.
“Broker market share in Australia is delivering competition and choice to consumers and is currently sitting at nearly 75%,” he said. “With the banks’ continued outsourcing of customer acquisition and retention to the more efficient broker channel, we expect that number to continue to grow.”
