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The aggregation group achieved record settlements in the financial year 2024 while broker numbers surpassed 4,000 for the first time.
ASX-listed aggregator Australian Finance Group (AFG) has released its financial results for the year ended 30 June 2024, revealing that its broker network delivered a record volume of total settlements in the financial year.
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Over the last year, AFG’s broker numbers surpassed 4,000 for the first time, adding 63 new AFG brokers across 186 groups (and seven new broker groups with more than six brokers) and 173 Fintelligence brokers.
The AFG broker network settled $62.7 billion in loans across all lending segments (up 5 per cent on FY23), servicing more than 500,000 customers. This took AFG’s total loan book to over $214 billion.
Residential settlements grew 3 per cent to $55.2 billion, with the group saying that one in 10 residential mortgages are now written by an AFG broker in Australia.
Despite a “challenging first half”, which was marked by “intense competition” and came off a softer FY23 result, the final quarter of FY24 saw settlements rise by 10 per cent.
Final quarter lodgements were also the highest Q4 on record for the group, which AFG attributed to the combination of the cash rate settling and “macro factors” seeing credit growth in both residential and commercial markets lift. It said that demand had continued into the beginning of FY25, with residential lodgements up 29 per cent in July.
AFG’s total residential loan book was $200 billion at the end of FY24.
Around half of all AFG brokers have a diversified business, helping settlements grow across asset finance (including through the use of AFG’s Partner Connect referral system) and commercial finance in FY24.
Asset finance settlements grew 21 per cent to $3.1 billion (estimated to be about 5 per cent of market share), including Fintelligence settlements (which it acquired in January 2022).
Commercial mortgage settlements were up 18 per cent to $4.5 billion. Its commercial loan book is now around $13.2 billion (when including the Thinktank white label arm). The Thinktank loan book grew to $5.8 billion.
The ASX-listed aggregator also saw settlement growth for its lending arm AFG Securities, which was up 4 per cent in FY24 (to $1.6 billion).
The total loan book for its loan manufacturing arm closed FY24 at $4.4 billion.
Favourable conditions are expected to persist into FY25 for AFG Securities given that Q4 lodgements were up 153 per cent compared to last year (at around $1 billion), with a new loan origination system accelerating its time to yes.
Overall, the group reported an underlying net profit after tax and amortisation (NPATA) of $36.1 million, while its net profit after tax was $29 million.
‘A tale of two halves’
AFG CEO David Bailey said: “The 2024 financial year has been a tale of two halves for our business. Our distribution division recruited strongly, our residential loan book hit a record high $200 billion, and new income streams enabled that part of our business to generate $44 million in profit before tax for the group.”
However, he said that the manufacturing division was impacted in the first half by high funding costs and competition being “heavily skewed towards major lenders”, but said that “fundamental changes in underlying market dynamics resulted in solid flows and the book has returned to growth”.
“We have had a record year in recruitment of brokers to the group,” the CEO said.
“The value AFG delivers to our brokers drives that growth.”
AFG said that its investment in broker platform BrokerEngine would further attract new brokers to the group and increase broker productivity, flagging that it was expecting to complete an integration that would allow direct lodgements in the first half of FY25. According to AFG, the system has helped save up to 90 minutes per deal for brokers.
Bailey said: “We are on the brink of completing the integration of the BrokerEngine platform into our technology suite. Our investment has enabled us to scale this technology, improving efficiency in broker operations and allowing them to provide seamless, compliant services to their clients.
“It’s rewarding to see our strategic vision for this investment coming to fruition delivering a best-in-market platform for our brokers and further scalability for AFG.”
‘Heading into FY25 with optimism’
Bailey said: “2024 marks AFG’s 30th year in business and as we celebrate this milestone, we close FY24 with a $200 billion residential loan book that is the result of more than 20 years of consecutive growth…
“We are an important player in a market where increasing numbers of Australians are choosing to use a broker. Our industry reports the current reach of brokers in the Australian finance market is sitting at 74 per cent. We expect total broker market share to exceed 80 per cent.
“We head into FY25 with optimism. AFG’s broker recruitment remains strong which will underpin growth in settlements and create a larger market in which to generate further earnings, and the major components of our technology spend is largely complete and benefits of this spend will generate new revenue in FY25.
“The major banks’ structural funding advantage has reduced, and funding markets are returning to a more normal footing. This will favour the non-bank sector and our manufacturing business.
“AFG is in an enviable position, equipped with a competitive edge that positions us well to drive our market share. We are committed to our strategy of delivering more products and services to our brokers and their customers, diversifying and growing our brokers’ businesses and AFG’s earnings profile.”
[Related: ASX-listed aggregator reshuffles broker support team]
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