Aggregator explains 30% jump in loans settled
COG Financial Services has reported record broker volumes for asset finance over the 2022 financial year, as mortgage brokers diversify beyond residential lending.
A listed entity, COG Financial Services (COG) is the parent company of Platform Finance and Consolidated Finance Group, which make up its broking and aggregation services. Its Platform Finance businesses provide asset finance, referral, and accreditation for mortgage brokers, and for some of the larger mortgage aggregation networks.
COG’s latest financial results, which cover the year to June 30, show a significant annual jump in broker volumes.
Referring to its “record broker volumes”, COG said the value of broker asset finance originations settled by aggregation members hit $6.7bn in FY22, a 30% increase from $5.1bn in FY21.
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Platform Finance CEO Ryan Young (pictured above) said the 30% annual jump represented “astounding growth”.
“In the past year alone, our broker network outperformed the market by at least two times, which really proves we are partnered with the best. This both reflects and reinforces our commitment to helping them succeed and take market share, and it gives us the confidence to redouble our investments in the sector,” Young said.
The financial results also demonstrated the resilience of the asset finance sector, as a record number of businesses invested in new vehicles, equipment, and machinery over the year, he said. Despite supply chain disruptions, fuel concerns, border restrictions and other global ructions, he said demand for asset finance had grown year-on-year.
“The sector has truly defied expectations that the pandemic would throttle asset finance. Transport, construction, agriculture, forestry, and infrastructure/civil works have all been performing strongly, which has led to a surge in asset purchases,” Young said.
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Although the asset finance sector had always been strong, it had largely been invisible, he said. The latest results show that asset finance “has finally come out of the shadows”.
“Not only does COG give the sector an identity, but our results also highlight the strength of the market and show other investors, including funders, that this is a sector worth investing in,” Young said.
So, what’s driving mortgage brokers to sell asset finance?
The two main drivers are the current pace of the mortgage and property market and cross-sell opportunities, Young said.
“We know as markets are flat out, brokers will tend to focus on the core business, but when things slow down, they’re much more inclined to take a look at asset finance and in particular, our personal loan opportunities (available via our Mildura operation).”
Mortgage businesses are increasingly becoming more sophisticated and working their databases a lot more, he said. Many brokers have small to medium-sized businesses among their existing clients and can identify cross-sell opportunities.
“Asset finance is a strong cross-sell opportunity for mortgage brokers regardless of their client base,” Young said.
Recent trends, such as an increase in the number of mergers and acquisitions, provide opportunities for growth, he said.
“We are certainly on the acquisition trail to identify more opportunities to further grow our broker network and continue to enhance our service offerings for both COG brokers and independent network member brokers,” he said.
Westlawn, the group’s funds management and lending arm, provides an extra option to COG brokers and fills gaps in the group’s lending panel, Young said.
“Our scale allows us to make this a fully-fledged finance company rather than just another white label – and it’s exclusive to our broker network,” he said. “COG is fully focused on asset finance and, if this run-rate continues, it means we can continue to invest and provide our brokers with more and more of what they expect and need to boost productivity and separate themselves from the competition.”
Financial results for the COG Financial Services group show revenue of $323m, up 18% on the 2021 financial year (includes government grants). Earnings before interest, taxes, depreciation, and amortisation (EBITDA) was $51.3m, up 10%, and net profit after tax was $29m, up 16%. The group declared a full-year dividend of 8.3c per share.
