Australian Finance Group has flagged asset finance as the next market it will target for diversification of its business.
AFG made its first move in this direction last November, when it announced that it would acquire 75 per cent of asset finance aggregator National Finance Australia, which trades as Fintelligence.
AFG paid A$52.5 million for its stake in Fintelligence and it has an option to acquire the remaining 25 per cent over the next three years.
Fintelligence, which was established in 2018, services 285 brokers and at the time the deal was announced was settling $80 million a month.
AFG chief executive David Bailey said asset diversification allowed the company to capitalise on the growing share of mortgage and commercial finance originations through brokers and also improve its margin.
To date, the company’s diversification strategy has included the establishment of a securitisation program to allow it to manufacture mortgages, and a 33 per cent investment in commercial lender Thinktank.
Speaking at a briefing to present AFG’s December half-year results, Bailey said: “The asset finance market is underserved. It is the next cab off the rank.”
AFG reported net profit of $30 million for the six months to December – an increase of 20.3 per cent compared with the previous corresponding period. Operating income rose 31.5 per cent to $469.7 million.
Residential mortgage settlements rose 47 per cent to $30.8 billion and the value of the book grew 9 per cent to $173.8 billion.
AFG Securities, which originates the company’s own funded loans, increased settlements by 192 per cent to $1.3 billion.
Commercial settlements were up 83 per cent to $1.8 billion and the value of the commercial book rose 14 per cent to $9.9 billion.
Broker number stood at 3050, or 3525 including Fintelligence and other non-residential brokers.