Profits down but volumes up at Homeloans Pty Ltd

Homeloans Limited, Australia’s only listed non-bank lender still writing new mortgages, has recorded strong growth in lending volumes over the 2011 financial year, though profits after tax are down. 

Lending volumes of Homeloans-branded mortgage products increased 21% over the year ending June 30, 2011. 

During this period Homeloans recorded statutory net profit after tax of $9.2 million, down 25% from the previous corresponding period result of $12.3 million. 

Homeloans executive chairman Tim Holmes described the result as “pleasing” during a “very challenging operating environment”. 

“It is particularly pleasing that we have been able to grow lending volumes of our own branded product by 21% over a 12-month period which has seen housing credit growth rates fall to 25-year lows and the level of competition for mortgage lending intensify significantly,” he says. 

The lender expects the challenging market conditions to persist over at least over the first half of the new financial year but maintains a positive outlook. 

“We will continue to explore opportunities to grow our distribution and broaden our product range and focus on strengthening our position as a genuine alternative to the major banks. Our resolve has not wavered,” Holmes says. 

RHG is the only other listed non-bank lender, but now operates a closed mortgage book. 

It recorded profits after tax of $74 million for the June 30 financial year.

RHG holds the mortgage book of RAMS Home Loans, whose brand and franchise network was purchased by Westpac soon after a disastrous float in October 2007 on the eve of the GFC. 

Non-bank lenders have struggled to compete with the major banks since the GFC which led to securitised funding – the lifeblood of non-bank lenders – drying up. 

Before the GFC, non-banks held about 20% of the market. Currently their market share is less than 2%.