This article is from the Australian Property Journal archive
MORTGAGE aggregator Australian Finance Group (ASX: AFG) hit a new record in its residential loan book over the financial year, at $200 billion.
AFG reported a net profit after tax of $29 million over FY24, down from 23% from FY23, with underlying NPATA at $36.1 million, down 25% on FY23. Revenue was up 7% to $1.07 billion.
Net cash flows from operating activities were at $39 million in FY24, for a cash conversion ratio of 107%, delivering net cash, liquid assets, and other high performing investments totalling $190 million.
AFG declared a final fully franked dividend of 4 cents per share, for a full year dividend of 8 cents per share and a dividend yield of 6%.
“The 2024 financial year has been a tale of two halves for our business. Our distribution division recruited strongly, our residential loan book hit a record high $200 billion, and new income streams enabled that part of our business to generate $44 million in profit before tax for the group,” said David Bailey, CEO at AFG.
The distribution division of the group saw an increase in earnings before tax of 20% over the year to $54 million. Residential settlements up 3% over the year, with final quarter lodgements at their highest level on record for Q4.
The division also saw record broker recruitment over the year, with the AFG broker network now exceeding 4,000.
“The continued solid performance of our investments in the Fintelligence and BrokerEngine businesses contributed a gross profit increase of 12% year on year. Fintelligence settlements were up 22% and our total leasing and asset finance settlements surpassed $3 billion,” said Bailey.
“We are on the brink of completing the integration of the BrokerEngine platform into our technology suite. Our investment has enabled us to scale this technology, improving efficiency in broker operations and allowing them to provide seamless, compliant services to their clients. It’s rewarding to see our strategic vision for this investment coming to fruition delivering a best-in-market platform for our brokers and further scalability for AFG.”
Meanwhile the manufacturing division saw AFG Securities’ loan book at $4.4 billion, returning to growth with an 8% increase or $0.3 billion on six months ago.
However, in the manufacturing division, earnings before tax were down 53% to $15 million.
“Our manufacturing division was impacted in the first half by high funding costs and competition heavily skewed towards major lenders. In this environment AFG Securities maintained discipline with credit appetite and returns on capital,” added Bailey.
“This affected both volumes and the margin we made on those volumes, resulting in our Manufacturing division’s earnings decreasing 53% to $15 million.”
“However, in the second half of FY24, fundamental changes in underlying market dynamics resulted in solid flows and the book has returned to growth. The final quarter of FY24 delivered over $1 billion in lodgements for AFG Securities. These volumes will flow to settlements in FY25.”
Net Interest Margin (NIM) reduced to 113bps, attributed to high levels of competition over the period and high funding costs.
“Our NIM in FY24 has understandably been affected by intense competition and historically high warehouse prices. Funding costs are now starting to improve; however, we will elect to reinvest these improvements into customer pricing to remain competitive and expand our loan book. This strategy will yield benefits in future periods as our NIM begins to recover,” said Bailey.
While there were $1.5 billion in RMBS transactions over FY24.
“We are an important player in a market where increasing numbers of Australians are choosing to use a broker. Our industry reports the current reach of brokers in the Australian finance market is sitting at 74%. We expect total broker market share to exceed 80%,” added Bailey.
“AFG is in an enviable position, equipped with a competitive edge that positions us well to drive our market share. We are committed to our strategy of delivering more products and services to our brokers and their customers, diversifying and growing our brokers’ businesses and AFG’s earnings profile. With strong cashflows and a conservative balance sheet AFG remains committed to delivering value to our shareholders through a continued focus on our core business drivers and disciplined financial management.”
