Liberty (ASX:LFG) share price gains on FY21 earnings

The market is responding well to Liberty's full year results.

The Liberty Financial Group Ltd (ASX: LFG) share price is in the green following the release of the non-bank lender's earnings for financial year 2021 (FY21).

Right now, the Liberty share price is $7.16, 2.14% higher than its previous close.

share price up

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Liberty share price jumps on 37.6% boost to profit

Here's how the ASX newbie performed during FY21:

  • $853.1 million of revenue, 0.1% more than that of FY20
  • Profit after tax of $185.4 million, 37.6% higher than the previous financial year
  • 24 cent unfranked final dividend

Liberty's income benefited from a 4.5% increase in average financial assets which was more than offset by a reduction in interest income yield from 5.6% to 5.1%. Its profit after tax included $32.5 million of IPO-related expenses.

Over FY21, the company's portfolio of financial assets increased to $12.3 billion following $4.1 billion of originations.

Liberty's fee, commission, and other income increased 13.5% to $231 million.

The company's expenses fell 8% to $640.7 million in FY21.

Impairment of financial assets decreased from $32.5 million in FY20 to $400,000 in FY21.

The company ended the period with $603 million of cash.

What happened in FY21 for Liberty?

Perhaps the most exciting news from Liberty in FY21 was its ASX debut.

The company's prospectus' offered potential investors the opportunity to buy into Liberty for $6 per share. That left Liberty with an expected market capitalisation of $1.82 billion.

Liberty's Initial Public Offering (IPO) occurred around midday on 15 December 2020. The Liberty share price finished its first session trading at $7. That represents a 16% gain on the offer price.

The company's share price was also boosted when Liberty reported its half year results in February.

What did management say?

Liberty's CEO, James Boyle, commented on the results boosting the company's share price today, saying:

We achieved our objective of continuing to help more people get and stay financial with Liberty.

Liberty's business partners and customers have shown tremendous resilience during the pandemic.  

The current Australia wide lockdown and speed of vaccination rollout is causing continued short-term economic uncertainty impacting customer sentiment. However, all things equal, we remain confident of generating further value for Security holders in FY22.

Liberty's chief financial officer, Peter Riedel, added:

LFG's capital and liquidity position remains in a strong position to continue supporting our customers and business partners. LFG established eight new funding vehicles in FY21 raising $4.9 billion in the new liquidity.

What's next for Liberty?

Here's what market watchers interested in the Liberty share price might want to keep an eye on in FY22:

Liberty plans to increase its profitability through improving its customers' experiences, choices, and its risk adjusted returns.

It will do so by speeding up its approvals process using its proprietary technology, focusing on quickly and helpfully answering customers' queries, and providing customers and business partners with access to their information online.

To improve its customer's choices, the lender will be increasing the ways it can fulfil its financial needs and creating options for those who are normally excluded from its offerings.

Finally, Liberty will improve its risk adjusted returns by simplifying, speeding up, and reducing the effort involved in its applications, working proactively in cooperation with customers if things don't go to plan, and being responsible with costs, and fair with customers.

Liberty share price snapshot

The Liberty share price has remained relatively steady since it listed on the ASX. Its highest price so far was $8.35, while its lowest was $6.60.

Right now, the company's share price is 2.2% higher than its first close but 5.1% lower than it was at the start of 2021.

The company has a market capitalisation of around $2.17 billion, with approximately 303 million shares outstanding.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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