Lending slump due to regulation, says YBR

Yellow Brick Road has blamed regulation and the Hayne royal commission for a slump in loan volumes.

YBR executive chairman Mark Bouris. Picture: John Feder

Mark Bouris-led Yellow Brick Road has blamed regulatory factors and the Hayne royal commission for a slump in third-quarter home loan volumes, as the group continues to face tough operating conditions.

The company said loan settlements dropped 20 per cent to $2.5 billion in the three months ended March 31, compared to the previous quarter.

Receipts from customers fell 6 per cent over the period.

The company’s statement suggests stricter interpretation by lenders of mortgage serviceability and softer demand for home loans is having an impact.

But YBR’s underlying loan book edged up 1 per cent to $49.2bn, and it moved to a slight operating cash surplus from a deficit in the previous quarter.

Mr Bouris, YBR’s executive chairman, has endured a turbulent 12 months after Macquarie Group sold down its holding in the mortgage and wealth group, leading to Ron Brierley’s Mercantile Investment Company emerging as a big force on the register.

The update showed under­lying funds under management increased 3 per cent in the third quarter to $970 million.

As at March 31, YBR held $4.2m in cash and cash equivalents, its ASX statement said.

The company is pursuing two term sheets to set up a facility so it can securitise loans, a process that has taken many months.

This year has also been bumpy for YBR. The release of its first-half results was delayed for several weeks in February as the audit was hit by delays. The earnings result — released in March — included a non-cash asset writedown of almost $34m on the group’s wealth, lending and other intangible assets, taking YBR’s net loss to $34.2m. Underlying earnings before interest tax, depreciation also deteriorated, however, also printed at a $2.5m loss.