Australian Finance Group smashes prospectus forecasts

Australia’s biggest mortgage broker, Australian Finance Group, is riding the tailwind of the housing boom.

Looking for a home.

Australia’s biggest mortgage broker, Australian Finance Group, has smashed its prospectus forecasts, riding the tailwind of the housing boom in its first full year as a listed company.

AFG today booked a net profit of $22.7 million for the year through June, an 11 per cent increase year-on-year and 15 per cent ahead of the group’s prospectus forecasts. The company was floated on the local exchange in mid-2015.

Revenue for the company (AFG) rose 2.8 per cent to $547m. Residential mortgage broking was boosted by an 8 per cent lift in settlements worth $33.8 billion. Commercial broking settlements were up 15 per cent to $2.76bn.

The group has a significant wholesale operation, sourcing lending products from over 45 principal lenders, which are subsequently distributed through a network of 2650 affiliated brokers.

Established in 1994, AFG now controls around 10 per cent of the Australian mortgage market. The group has a combined home and commercial loan book worth more than $120 billion.

Managing director Brett McKeon said AFG is “systemically important to the Australian banking system” with a mortgage market penetration of more than 50 per cent.

Profit was assisted by a beefed up net interest margin generated, which was supported by the group’s loan securitisation program, with the loan book increasing slightly over the year to $1.04bn.

“Our commercial loan book grew very well during the year as more small to medium sized businesses recognised the value a commercial broker can deliver,” Mr McKeon said. “We expect this trend to continue, predominately in asset lending.”

Mr McKeon said settlements were particularly strong on the east coast, particularly in Victoria and Queensland.

“AFG has recorded an excellent first full year as a listed company in 2016 with outperformance of prospectus forecast results and a positive outlook for the future,” he said.

AFG will pay a 5.4c final dividend, bringing the year’s total distribution to 8.4c.