Aussie mortgage franchise sees decline in loan settlement

Mortgage franchise Yellow Brick Road posted a 2% decline to AU$7.74bn in loan settlement volume in the first half of FY18 over the previous period as it reduced its number of branches.

YBR said in its result announcement that it has focused the past year on making sure its branches met regulatory compliance requirements and customer service standards. As a result, the company saw a reduction in its number of branches and a decline in its lending volume.

“While this approach has had a short-term impact, we are confident that it sets us up for long-term success. We have a refreshed approach to recruitment, induction and onboarding to attract quality branch owners who can deliver solid business results,” said the company in an investor update.

A YBR spokeswoman told Australian Broker yesterday that the company has successfully recruited a number of new branches to its network in recent months, which it expects to help support its loan volumes in the second half of FY18.

“Our Vow and YBR Professional e-learning platforms have now been launched to our broker partners, helping them to grow their business and technical skills – this will be another driver of productivity,” she said.

The company also expects the addition of a small business lending product through its partner Prospa to provide additional revenue opportunities for its network and support growth in commercial lending.

YBR announced its entry into the SME space in December with a partnership with online lender Prospa.

Overall, the company delivered 85% growth in profitability, with net profit before tax increasing to AU$0.53m in the first half of FY18 over the same period of FY17. It cited higher revenue – up by 5% – and lower costs – down by 4% – as drivers of its result.

Growth in the company’s revenue included an increase of 17% to $47.8m in recurring revenue streams (combined wealth management and lending).

YBR partly attributes this to the increase in underlying loan book and underlying funds under management. Underlying loan book grew 14% to AU$46.1bn, while underlying funds under management increased 56% to AU$1.4bn.

Origination revenue declined, with lending down by 6% and wealth down by 12%, said the company.

By broker number, the YBR Group network now has about 1500. This is lower than the 1,700 individual broker businesses, including YBR franchises and independent brokers working through Vow Financial, reported by Australian Broker in its coverage of the company’s 2017 financial result in August 2017.

YBR expects its lending platform Vownet, which it has started rolling out, to be a big driver of its recruitment, with brokers drawn to its ease and simplicity, said the company spokeswoman.

This article first appeared in our sister publication Australian Broker.

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