Liberty Financial’s profit slides, borrower stress on the rise

The non-bank lender saw its profit shrink through the year as borrowers increasingly struggle with higher loan repayments.

More borrowers are struggling to make loan repayments, Liberty Financial says.

Liberty Financial has posted a 34 per cent slide in full-year profit amid heightened competition in the lending market.

For the 12 months through to June 30, the non-bank lender posted a net profit of $127m, down from $193m the year prior, with its net interest margin – a key profitability measure – shrinking 25 basis points over the period.

Liberty’s NIM was 2.51 per cent by the end of June, down from 2.76 per cent at the end of fiscal 2023.

“The reduction in profit reflects the impact of trading through a period of economic uncertainty and elevated competitive activity,” Liberty chief executive James Boyle said.

“We have managed to help more customers, increase our financial assets, improve our team’s efficiency and our loan losses remain low,” he added.

Borrower stress rose through the year, with both 30- and 90-day delinquencies jumping sharply.

The value of impaired loans jumped 56 per cent to $309m.

For 30-plus day delinquencies, Liberty saw a jump to 3.79 per cent, up from 2.97 per cent a year prior. The 90-plus day delinquencies also rose, to 2.11 per cent from 1.47 per cent as borrowers struggled to catch up on missed payments, the lender said.

The value of financial assets increased 8 per cent to $14.6bn.

Chief financial officer Peter Riedel said the lender’s capital and liquidity position remained strong.

“Liberty raised $5.6bn in funding in the 12 months to June 30 and Standard and Poor’s upgraded Liberty’s investment grade corporate rating to BBB (stable outlook).”

“Our market leading net interest margin of 2.51 per cent and return on equity results are a further demonstration of Liberty’s focus on building durable business value across the banking and finance landscape,” Mr Riedel said.

Operating expenses were stable through the year, with stable personnel costs delivered through lower staff numbers despite wage inflation.

Liberty reported underlying cash return on equity of 11 per cent.

The lender declared a final unfranked distribution of 13c per security, down from the previous financial year’s 24c per security.

Liberty shares last traded at $3.50.