Yellow Brick Road will launch a television campaign in coming weeks, promoting the first product of its securitisation program.

In November 2019 YBR formed a joined venture with asset manager Magnetar Capital to launch a mortgage-backed securitisation business.

YBR executive chair Mark Bouris described the loan as a simple, no-frills variable rate mortgage. The current rate is 2.39 per cent.

Bouris said the YBR-branded business would improve the company’s margin and his focus is on building scale.

The company has a lot riding on this new business direction. Its mortgage book is not growing and it fell back into negative cash flow in the December half.

According to the company’s interim financial reports, settlements increased by 11 per cent to A$6.3 billion in the six months to December but the value of the loan book was unchanged at $50.2 billion.

Customers reacted to record low interest rates and refinanced or accelerated loan repayments.

This meant that older, higher margin loans ran off faster, impacting the value of the company’s trail income.

YBR reported net profit of $231,000 for the six months to December – compared with a profit of $3.9 million in the previous corresponding period. The December 2019 result included a $6.9 million gain on the sale of a business.

Revenue rose from $91.9 million in the December half 2019 to $99.8 million in the latest half. Total expenses grew from $92.5 million to $99.6 million over the same period.

Net cash used in operating activities was $657,000, compared with positive cash flow of $1.1 million in the previous corresponding period.