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The group’s half-year results, ended 31 December 2022, showed a $5 million drop in new commercial lending, compared to the prior half-year results.
ASX-listed N1 Holdings (ASX:N1H) reported in its half-year results ended 31 December 2023, commercial lending totalled $54 million, which marked a fall from the $59.5 million reported in the second half of 2022.
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However, revenue generated from its commercial lending totalled $5,739,795, with the remainder coming from its mortgage broking revenue (including trail commission) at $888,335.
The group’s commercial lending business remained the “major revenue generator”, accounting for 81.4 per cent of the group’s total revenue.
Noting the Reserve Bank of Australia’s (RBA) persistent rate hikes, executive chairman and chief executive Ren Hor Wong said it “disrupted the market for property transactions.”
“The management of the company in the last six months has prioritised pricing and valuation reset of our loan receivables book, made possible by our unique short-term lending product,” Mr Wong said.
N1 Holdings (N1H) works alongside accountants and mortgage brokers as a property financer, focusing on complex lending for sophisticated property investors, SME owners, and property developers.
The group offers loans of between $100,000 to $5 million with typical terms being three to 12 months, secured by first mortgages or second mortgages over established real estate.
In its half-year results, loans with a loan-to-value ratio (LVR) of more than 70 per cent had increased to $10.3 million, from $4.4 million in the previous reporting period, while loans with an LVR equal to or less than 70 per cent had dropped by $3 million to $33.8 million.
As the company seeks to grow, Mr Wong said it had “transformed its business model into a property backed SME lender”, partnering with mortgage brokers and aggregators.
“Mortgage broking and mortgage management remain the group’s defensive strategy,” Mr Wong said.
“The growth of recurring trail commission income remains steady, and the company expects further growth driven by the better margin mortgage management business, N1 Plus.”
The company’s own mortgage management business N1 Plus offers branded home and commercial property loans across prime, near-prime, and specialist niches.
The ASX-listed company has also recently joined outsource Financial’s lending panel as it seeks to expand its panel of lenders.
Mr Wong was confident there was increasing demand in the property-backed SME lending space market, especially for the current rising rate climate.
“We are thrilled to be able to work with the team and valued broker partners at outsource Financial,” Mr Wong said.
“We have recently increased our funding size to $115 million, and our business model enables us to be able to work closer together with outsource Financials’ brokers to add value in the space of SME lending.”
Overall, the group reported a profit after tax of $165,745 for the half-year period.
[Related: SME lender joins outsource Financial lending panel]
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