AFG, the nation’s largest aggregator, which currently manages almost one in 11 mortgages, has reported a record year in both residential broking volume and the recruitment of high performing brokers.
“AFG’s residential broking business has had a record year by volume,” Managing Director Brett McKeon said at the company’s recent Annual General Meeting held in Perth.
The aggregator’s residential loan book rose from $102.6 billion at 30 June 2015 to $114.7 billion at 30 June 2016, McKeon said.
McKeon also stated that AFG has had “a record year” in the recruitment of high performing brokers to the aggregator. “We have lifted our broker numbers from just over 2,400 in 2015 to finish the financial year with over 2,650 active brokers working with AFG.”
McKeon attributed the record recruitment to winning market share in New South Wales and Victoria, states that have been a “core focus” of the business.
Chairman Tony Gill also spoke of the company’s success in its first full year as a listed company, revealing an EOFY16 net profit after tax of $22.6 million – a result approximately 15.1% ahead of Prospectus.
The aggregator’s residential and commercial loan book reached $120.4 billion for the year, with residential settlements up 8% to $33.84 billion for FY16.
Chairman Tony Gill attributed the results to strong sales of AFG’s white label products, an increase in settlements and improved securitisation margins.
“This result was supported by an exceptional year for the commercial lending business,” said Gill. “Our Commercial loan book grew steadily during the year as more small to medium sized businesses recognized the value a commercial broker can deliver.”
McKeon added that asset finance was a big contributing factor to this success: “Our commercial book is showing solid growth. Commercial settlements grew by 15% year on year to reach $2.76b, exceeding the prospectus FY2016 target of $2.45b. We expect this trend to continue, predominantly in asset lending.”
The results come following AFG’s strategic alliance with leading international fintech company Biz2Credit Inc in August 2016. When rolled out, the exclusive agreement will leverage Biz2Credit’s patented analytics and financial services technology to provide small business borrowers with a broad range of options and deliver faster access to capital, according to McKeon.
“This new platform is a first for Australia and will not only enable existing lenders to reach their target audience in the small to medium enterprise (SME) market faster, but will also open the door to more choice for consumers,” he said.
Chairman Gill also addressed the intense scrutiny directed at the financial services sector this year in the aggregator’s AGM. However, Gill stated that the spotlight on corporate culture and risk “is actually refreshing to see,” stating that the essence of AFG’s business is trust, and that mortgage brokers have great opportunity in their position of trusted adviser and upholder of that trust.
“Their livelihood is based upon that shared interest. Without that trust they will not retain that client or benefit from referrals to grow their business,” he said.
AFG’s white label products were reported as having exceeded expectations in FY16, with $1.44 billion in settlements driven by the move from a soft launch to full rollout of the Edge product, and the more recent addition of the Icon home loan, according to McKeon.
“These have been well received by our broker network with the products delivering more choice, competitive pricing and excellent service to our brokers and their customers; we expect further growth from this business line in future years.”
McKeon also attributes much of the aggregator’s success to its development and rollout of its technology platform FLEX, which has the ability to generate additional revenue for brokers by allowing them to access customer data held within the system.
Gill stated AFG has, in a large part, “stepped up to replace the traditional Bank branches”, thanks to the aggregator’s ever-growing broker network.
Throughout 2016, AFG brought on additional lenders which saw its panel grow to more than 45 lenders, “delivering more competition to the market place, securing wider choice for our brokers and further strengthening the broker value proposition,” McKeon said.