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The asset finance group saw its broker members write $7.7 billion in the financial year 2023, which it attributed to an increase in broker members.
ASX-listed finance group COG Financial Services Limited has seen “robust broker volumes” in its preliminary FY23 results.
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While its full financial year results are set to be released on 25 August, the group has provided some preliminary figures.
According to COG, which includes asset finance aggregator COG Aggregation, its broker members wrote $7.7 billion in loans in FY23, representing a 22 per cent or $1.4 billion increase in growth.
Head of COG Aggregation, Mark Rayson, said the growth rate could be attributed to two key factors: “[T]he increase in broker members; and, more importantly, the growth of our members’ own businesses”.
Mr Rayson added that COG estimated its members therefore settled approximately 23 per cent of all asset finance in Australia and arranged finance for 12 per cent of the total equipment, plant, and machinery CAPEX more broadly.
Commercial activity
The preliminary financial information also revealed commercial volumes rose over the year, which Mr Rayson said showed it has been “very resilient to the interest rate rises, which suggests a two-speed economy”.
He flagged that tax incentives for commercial equipment purchases, which ceased at the end of June, had partially driven demand last financial year.
However, he flagged that despite strong demand, commercial customers had “become more focused on interest rates which has made it a challenging time for [COG] brokers”.
Damian Mantini, COG’s head of strategic partnerships, said it had been an “interesting and rapidly evolving time” for consumer finance, with consumers tightening their purchases due to the increasing cost of living.
He said: “Consumer purchases are often more discretionary and therefore sensitive to rate increases. And if you compare this financial year with last, the use of unsecured personal loans has changed dramatically.
“Last year, the primary purpose was for home renovations, whilst this financial year it has gone towards debt restructuring to lower customers’ outgoings or assist with mortgage serviceability.”
The group said it was continuing to look to grow its consumer focus, a key reason for its recent acquisition of the NFC and United Financial Services (UFS) aggregation businesses.
Mr Rayson said: “We were comfortably the largest commercial asset finance aggregator, however, we saw an opportunity to grow our business in the retail sector.
“The acquisition has boosted our standing with certain funders, and whereas we might have previously ranked number two or three, we are now number one.
“It allows us to be best in class for our brokers across the full spectrum of asset finance products and to give them the tools to capitalise, knowing they’re getting the best proposition available.”
Future headwinds
Despite the positive preliminary results, the aggregator said it was “realistic” about the challenges the market faces and that it knows it needs to be “agile and confront them as needed”.
“We also know that as the market becomes more challenging, brokers require the broadest range of options so they can access every opportunity. And they need the certainty that they’re getting the best options available for their clients,” Mr Mantini said.
He also indicated the continuing stock supply issue for new cars as one of the challenges the aggregator would continue to face, stating: “This prompted us to acquire the balance of our car buying business and refocus it to being a value-add for brokers.
“We were able to help brokers shorten and improve their conversion cycle via regular stock drops, enabling their clients to move to vehicles that were currently in stock,” he explained.
Mr Rayson said the organisation would need to continue to adapt and develop.
He concluded: “Our profession is becoming more complex each year, and we have an important role in ensuring there are specialist asset finance solutions available, to complement brokers’ expertise, maximise their efficiency, and minimise their risk.”
[Related: 2 asset finance aggregators acquired by COG]
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