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 net interest margin (NIM) and market cycle, but returned to growth in H2.

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

• 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 AFG to capitalize on market opportunities and industry trends.

Financial highlights

• Total revenue reached $1.08bn, up 7% year-over-year, driven by growth in residential settlements and trail book.

• FY 2024 NPAT was $29.0m, down 22% year-over-year, mainly due to manufacturing segment challenges.

• Distribution gross profit grew 20% to $54.1m; Manufacturing gross profit fell 53% to $15.5m due to lower NIM and Thinktank contribution.

• Operating expenses reduced by 3% to $86.0m, with cost savings from lower headcount and discretionary spend.

• Fully franked dividend of 4.0cps 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-over-year.

• Optimism for continued broker network growth, technology-driven efficiency, and higher margin product expansion.

• Market conditions expected to improve with forecasted cash rate reductions in 2025, benefiting both customers and non-bank lenders.