This article is from the Australian Property Journal archive
IN line with much of the non-bank sector, Australian Finance Group (ASX: AFG) reported a downgrade in profits over the FY23 period, while continuing its diversification strategy.
AFG posted a net profit after tax of $37.3 million in FY23, down 3.8% from $38.7 million in FY22.
The group delivered a record revenue for the full year period at $1.037 million, up 8.0% from $928.98 million in FY22.
AFG also posted an underlying gross profit of $122.8 million and an underlying NPATA of $48.3 million.
AFG declared a fully franked final dividend of 4.1 cents per share, having paid an interim dividend during the year of 6.6 cents per share.
“While the 12 months to 30 June 2023 were tougher than anticipated, AFG reported underlying NPATA of $48.3 million, down from $55.8 million previously. Given the strong cash generating nature of our business, this converted to $52.1 million in operating cashflow,” said David Bailey, CEO at AFG.
“A highlight for the year was asset finance settlements nearly doubling the previous financial year underlining the important role our investment in Fintelligence plays in opening up new revenue lines.”
AFG continued to work on its diversification strategy, with investments into BrokerEngine, Fintelligence and Thinktank reaping strong results for the group and contributing 32% to FY23 NPAT.
AFG’s combined residential and commercial loan book was up 7% to $206.5 billion, with a residential loan book of $194.5 billion and a commercial loan book of $12 billion.
While the AFG Securities loan book averaged $4.8 billion in FY23 up 20% on the previous year., with the loan book closing at $4.5 billion.
“Given the external landscape, margins across the non-bank sector came under increasing pressure, with AFG not immune from that impact,” added Bailey
AFG did maintain a strong balance sheet over the period, with a record $1 billion RMBS issuance and no losses incurred on book.
In addition to $202 million in liquid assets and investments and a three-year TSR of 29%.
AFG had an operating cashflow of $52.1 million, with 108% cash realisation and $60 million in unrestricted cash.
“I’m proud of the resilience displayed by AFG in FY23. An unprecedented run of increases in the official cash rate and concerted campaigns by the major banks to expand their market dominance through cheap funding and cash-back offers tested our strategy, our business model, and our people,” added Bailey.
“I’m pleased to report AFG’s strategy responded well to this market volatility, which has also allowed us at the same time the opportunity to invest in and improve our business. The FY23 results reinforce the importance of our strategic investments to our growth, while our trail book continues to deliver annuity-style earnings providing a platform for strong cash conversion and investment.”
AFG’s dividend payout ratio has been temporarily reduced to 50 to 60% for up to 24 months during this investment cycle.
