AFG CEO David Bailey
Mortgage brokers have welcomed banks’ recent moves to accelerate the pace of digitisation, saying it will help their businesses as well.
A number of bankers have reported that COVID-19 has prompted much stronger take-up of online and mobile services. Some see it as a permanent change and they are bringing forward digitisation projects.
Brokers say services such as digital signature will allow them to offer an enhanced service, and their own technology investments will allow them to reach a broader market.
Australian Finance Group chief executive David Bailey said: “We see more banks closing branches. That presents more opportunities for brokers because with limited access to branches borrowers may be more inclined to visit a broker.”
Speaking at an investor briefing to present the company’s 2019/20 financial report, Bailey said: “We are doing more work on digital access as well. Our investment in technology ensured our brokers and staff could adapt rapidly. This capability will continue to develop.”
AFG will launch a new customer portal later this year and a new broker portal in the first half next year.
Mortgage Choice chief executive Susan Mitchell said: “We have a digitally enhanced broker proposition. One benefit of it is people can deal with their broker remotely.”
“Whatever the banks do, the reasons for using a broker are still there. Brokers offer choice and help with the process. We think there will be greater demand for broker services because in this environment peoples’ finances are getting more complex.”
AFG reported a net profit of A$38.1 million for the year to June – up 15.3 per cent from its profit of $33 million in 2018/19. Underlying profit was up 27 per cent to $36.3 million.
Revenue was up 6.1 per cent to $682.2 million.
In its aggregation business, residential loan settlements rose 9 per cent to $34.1 billion and the book rose 5 per cent to $154.6 billion.
In the AFG Home Loans branded business, white label settlements fell 15 per cent to $1.8 billion and the book grew 6 per cent to $7.6 billion. Securitised loan settlements grew 28 per cent to $1.3 million and the book grew 41 per cent to $2.9 billion.
On the business lending side, commercial aggregation settlements fell 2 per cent to 2.3 billion and the book grew 5 per cent to $8.5 billion.
Since the start of 2020, the average home loan size has fallen from around $550,000 to $510,000. Bailey said this was a reflection of the fact that lenders still want to do business but they have tightened their lending standards.
AFG included a $3.3 billion charge for expected credit loss – up from $757,000 in the previous year.
In the securitised book, at June 30 only 19 of 7543 loans were in arrears. In May 9.6 per cent of the loans in the book were on deferral or hardship arrangements; by late August that number was down to 5.3 per cent
Asked by one analyst at its investor briefing why its provisioning looked less lighter than many of the banks, Baily said: “We need to have higher credit pools to allow us to term out.
“We focus on category one postcodes, we have LMI for all loans over 80 per cent LVR and we have LMI for loans over 70 per cent in some postcodes. Our history is clean and our arrears are low.”
Of the three listed mortgage broker groups that reported over the past week – AFG, Mortgage Choice and Yellow Brick Road – AFG had the best performance in terms of growth in settlements and loan book
Mortgage Choice settlements rose 7 per cent but the value of its loan book fell 1 per cent. Yellow Brick Road did not report the change in settlements; its book grew 1.6 per cent.