Factoring features in FSA profit

Business lending, including invoice discounting, is beginning to contribute to the profit of FSA Group, a servicer of debt agreements that increasingly makes its money from lending.

Westpac is the funder of all FSA's activities in the direct lending field, most of it in the form of non-conforming home loans.  The firm also acts as a manager of loans funded by Bendigo and Adelaide Bank.

On Friday, FSA said that its net profit increased 12 per cent, to A$4.0 million, in the half year to December 2010. Revenue increased 11 per cent, to A$23 million.

The mainstay of the business used to be setting up and administering debt agreements, an alternative to bankruptcy. This continues to generate the bulk of pre-tax profit, though this will decline as the lending business picks up.

The non-conforming loan book roughly doubled, to $220 million, over the last year. The firm is aiming for a loan book of $600 million by 2013.

The factoring book is only at $16 million, but the group aims to grow this to $45 million over the next two years.