Brokers should be diversifying in FY24: Liberty CEO

According to the results, released on Monday (28 August), Liberty’s loan book grew 4 per cent to $13.5 billion, which the non-bank CEO said was a positive reflection of its long-term diversification strategy.

The lender has been pushing further into asset finance and commercial lending in recent years, with residential mortgages making up a smaller proportion of its overall mix.

As at 30 June 2023, approximately 60 per cent of its portfolio was for home loans – down from 68 per cent the year before.

Mortgage originations fell 23% in FY23

Across the financial year, Liberty originated $5.4 billion in new assets, a drop of 2 per cent on the previous financial year.

Indeed, the lender saw residential mortgage originations fall 23 per cent over the last financial year, to $3.0 billion when compared to the record $3.9 billion of originations in FY22.

Liberty highlighted that mortgage lending had been impacted by the rising interest rate cycle and “higher-than-trend discharges and amortisation”.

The non-bank’s overall mortgage portfolio shrank by $600 million, the results showed, falling from $8.6 billion in June 2022 to just over $8 billion by the end of FY23.

Speaking to The Adviser, Liberty CEO James Boyle added that this had come about amid “heightened activity driven by fixed-rate mortgage repricing” exacerbated by “aggressive market share competition from the banks”, particularly with cashbacks and strong discounting.

However, Mr Boyle flagged that the lender had not seen a continued reduction in growth so far in this new financial year, given that there had been “less volatility” in the mortgage numbers over the past two months as the banks had pulled (or are sunsetting) their cashback offers and refocused on net interest margins.

While mortgage lending had softened, the group saw a record in new originations for secured finance (motor finance and secured commercial property mortgages) and financial services lending, which partially offset the mortgage book reduction.

Liberty wrote $2 billion of secured finance in the year to June, a 43 per cent increase over FY22, driven by continued growth in auto finance lending.

Its total secured loan book sat at $4.7 billion at the end of FY23.

Moreover, its financial services arm – which includes SME loans, personal loans through its MoneyPlace brand, and broker lodgements via its aggregation groups Liberty Network Services and nMB as well as life insurance and general insurance, among other businesses – originated a record $385 million over FY23, a 49 per cent increase on FY22.

According to the lender, this was driven by market share gain from other non-banks, particularly in its personal loan portfolio.

Mr Boyle told The Adviser that brokers had continued to dominate loan originations across the market, flagging that Liberty was working to provide brokers with “a broader range of solutions for a broader range of customers”.

“In a year where we expect credit growth to be subdued – and once we get to the end of the fixed rate/mortgage repricing [boom] and the focus and demand from customers perhaps reduces, as well – I think the best thing that the broker community can do is make sure that they’ve got lots of different ways to help customers so that they can continue to grow their own businesses and importantly, help customers in different ways,” Mr Boyle said.

“We’re an exceptional partner to help them [on] that journey.

“We try to be super consistent and offer the best product we possibly can with the best solution we possibly can … and across the broadest number of customers that we possibly can. Because we accept that, at any point in time, one space might not be as appealing for new business for the broker community as others.

“SMSF lending, SME lending, margin lending, personal lending, residential lending, insurance products. These are all ways that we try to be really super relevant to brokers and therefore to customers, so as to make sure that – if there’s not as much activity in any one area at one point in time, there are other things that customers still need.

“That’s been a long-term strategy and we continue to focus on it, which means we hopefully don’t need to be overly reactive to these realities.

“The economy is going to go through periods where it contracts and expands and customers are going to go through periods where they’re feeling confident and not, so by [diversifing] hopefully we can always find time relevance and help customers regardless of those changes.”

Liberty is the latest non-bank lender to report a drop in new mortgage originations, with Pepper Money mortgage originations having fallen 58 per cent to $1.7 billion in FY23.

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Speakers will unpack how brokers can build a sustainable business model and service all of their SME clients' needs, including access to finance.

The 2023 SME Broker Bootcamp will take place in the following locations:

• Wednesday 6 September: Rydges South Bank, Brisbane
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For more information about the conference, including agenda and speakers, click here.

[Related: Liberty reports 14% drop in mortgage originations]