Mortgage firm AFG posts a net profit of $22.6 million in first year after listing
Mortgage broker Australian Finance Group (ASX: AFG) ended the financial year 2016 with a net profit after tax (NPAT) of $22.6 million, well ahead of its own outlook of $19.7 million.
The company grew its loan book to $120.4 billion, up 12.6 percent on the prior period.
The company said its profit was up 48 percent compared with $15.3 million from continuing operations in FY2015. It attributed the rise in profit to more residential and commercial settlements, better securitisation margins and increased sales of its self-branded products
The company’s managing director, Brett McKeon, said the result “was underpinned by another strong period of growth for our residential business, with settlements increasing by 8% to $33.84 billion”.
He also said that the broker market penetration of the Australian mortgage market was at more than 52%, which means a more important role for AFG.
AFG said its final dividend was 5.4 cents per share, a yield of 8.4% per share based on its closing share price at 30 June 2016.
The broker expects good growth in both residential and commercial settlements on the eastern seaboard, particularly in Victoria and Queensland.
“The company has a residential loan book of $114.7 billion generating ongoing trail commission and AFG’s own securitized loan book has seen improved net interest margin driving solid returns across the financial year. The FY2016 Securities loan book of $1.043 billion is up from $1.020 billion at 30 June 2015.”
“Our Commercial loan book grew very well during the year as more small to medium sized businesses recognized the value a commercial broker can deliver. Commercial settlements grew by 15% year on year to reach $2.76 billion, exceeding the prospectus FY2016 target of $2.45 billion. We expect this trend to continue, predominately in asset lending,” said McKeon.
“Our own AFG Home Loans business also outperformed internal expectations. From a prospectus forecast of $1.30 billion in settlements of white label products, we rounded out the financial year at $1.44 billion. This was driven by the move from a soft launch to full rollout of our Edge product, and the more recent addition of the new Icon home loan. These have been well received by our broker network with the products delivering more choice, competitive pricing and excellent service to our brokers and their customers.”
Earlier this month, AFG entered into an alliance with fintech company Biz2Credit Inc which will give it access to Biz2Credit’s patented analytics and financial services technology to allow small business borrowers access to more options and faster access to capital.