Australian Finance Group (ASX:AFG) share price gains on FY21 profit boost

The ASX mortgage broking group released its FY21 results this morning.

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The Australian Finance Group Ltd (ASX: AFG) share price is edging higher in late morning trade, up 0.84%, having earlier posted gains of 4%.

At time of writing, the Australian Finance Group share price is exchanging hands at $2.99 apiece.

Below we take a look at the ASX mortgage broking group’s full year financial results for the year ending 30 June, 2021 (FY21).

Australian Finance Group share price lifts on FY21 results

  • Total revenue increased 11% year-on-year to $767.1 million
  • Underlying net profit after tax (NPAT) of $49.6 million, up 37% from the $36.3 million reported in FY20
  • Net cash from operating activities increased 45% to $58.6 million
  • Declared a final dividend 7.4 cents per share, up 57% from FY20 final dividend

What happened during the reporting period for the company?

Australian Finance Group credited its 11% increase in revenue to settlement and loan book growth across its business.

The company reported a 28% increase in residential settlements to $43.6 billion. It said first home buyers and upgraders were driving the growth, powered by low interest rates, government stimulus and a better economic outlook.

AFG Securities settlements of $1.35 billion were roughly equal to the prior year, with the loan book increasing by 17% to $3.4 billion. The company said its combined residential and commercial loan book of $175.7 billion was up 8% from FY20.

Australian Finance Group’s broker numbers were also on the up, reaching more than 3,050 as at 30 June.

During the year, the company continued to roll out its new platform, CRM “built on enterprise-grade technology”. AFG said plans were underway for a staged migration of each broker across its network to the new platform.

In FY21, Australian Finance Group also acquired an 8% stake in neobank Volt. The company said that Volt’s innovative technology would help it deliver “streamlined digital solutions for our brokers and their customers”.

On the subject of environmental, social, and corporate governance (ESG) metrics, AFG advised it was making significant progress in its approach and reporting.

What did management say?

Commenting on the results, Australian Finance Group CEO David Bailey said:

This is a record profit for the company reflecting the hard work of our staff and our brokers who now count in excess of 3,050… This past year has once again shown the resilience of our business and the core role our brokers play in delivering a competitive lending market and a service sought after by Australians building wealth in the residential market and in business enterprises across the country.

Our brokers have experienced record demand for their services to Australian borrowers. Our core residential business increased by 28% this year to deliver $43.6 billion in settlements.

What’s next for Australian Finance Group?

Looking ahead, AFG said it was well-placed to continue delivering growth for its shareholders while offering choice and competition for Aussie mortgage customers.

As at 30 June, the company held cash and other financial investments of $282 million.

Bailey said AFG remained alert to the risks and challenges posed by the ongoing COVID-19 pandemic, but is confident the company was “well-equipped to respond”.

“As a major aggregator, AFG is well-placed to participate in the increased preference by Australian consumers to access home loan products through a broker,” he said.

The Australian Finance Group share price is up 56% over the past 12 months.

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