Australian Finance Group (AFG) H2 2024 earnings summary

Executive summary

• Achieved record broker network of over 4,000, writing 1 in 10 Australian residential mortgages, with 74% broker channel share and a $200bn residential loan book, up 3% year-over-year.

• Distribution segment delivered strong growth, while Manufacturing was impacted by lower NIM and market cycle, but returned to growth in H2.

• Technology investment peaked in FY24, with new digital platforms and broker services enhancing efficiency and supporting future growth.

• Strong cash generation and conservative balance sheet position the group to capitalize on market opportunities and industry trends.

• Strategy centers on being the aggregator of choice, growing broker network, investing in technology, and delivering higher margin products.

Financial highlights

• Reported NPAT was $29 million, down 22% year-over-year, mainly due to manufacturing segment challenges; underlying NPATA was $36.1 million, down 25%.

• Distribution segment earnings up 20% year-on-year to $54 million, now nearly 80% of total earnings.

• Manufacturing segment earnings down 53% to $15 million, with return on equity at 12%.

• Operating expenses reduced by $3 million year-on-year to $86 million.

• Fully franked final dividend of 4 cents per share declared, with a 60% payout ratio.

Outlook and guidance

• Strong start to FY25 with July 2024 residential lodgements up 29% and AFG Securities lodgements up 186% year-on-year.

• Optimism for FY25 driven by strong broker recruitment, completed technology investments, and improved funding markets.

• Broker market share expected to exceed 80% as industry trends favour broker channels.

• Expectation of improved credit markets and further non-bank competition, with cash rate reductions forecasted in 2025.

• Focus remains on growing broker network, expanding product diversity, and leveraging technology for higher margin growth.