Australian Finance Group is reported to be building up its focus on its own label of mortgage loans to bolster profit margins amid expectations of a slowdown in credit growth.
The Australian Financial Review reported yesterday (23 January) that AFG has informed its business development managers of the plan, with the view that they and brokers will grow their focus on white label mortgage products.
The report said it is unclear if AFG has set incentives or targets to boost mortgage lending through the broker channel. A company spokesperson said the company's brokers were paid "a standard rate of commission" for selling AFG products.
In his AGM speech last November, CEO David Bailey identified growing the penetration of AFG branded products as part of the company's strategy to grow its share of the mortgage broking market.
The company spokesperson said AFG had dedicated business development managers for its white label loans, and AFG affiliated brokers had to meet responsible lending guidelines when recommending mortgage products, reported the Australian Financial Review.
Australian Broker understands that AFG's branded home loans have higher margins. The business achieved settlements of $2.7bln in FY17, up 38% from the previous year. Profit before tax for the segment was up 142% from FY16, ASX records show.
The AFG Home Loans book stood at $5.5 bln at the end of June 2017, up 44% year-on-year.
The company recorded 2,875 active brokers at the end of FY17, an increase of 8.5%.
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