Homeloans suffers heavy fall in earnings

John Kavanagh
Homeloans Ltd has responded to increased competition in the mortgage market by investing in its broker distribution. As a result, new loan settlements picked up in the December half  - but the company's loan balance is not growing and earnings are down.

In its December half financial report, released on Friday, Homeloans said it had been working on a strategy of strengthening its relationships with broker networks.

It has invested in product development, improved the efficiency of its loan assessment process and its "on-boarding" prices, and worked with brokers to identify product niches and product features.

New lending volumes were up 17.2 per cent on the previous corresponding period and up 8.8 per cent on the June half last year.

Homeloans branded loans under management increased 2.3 per cent to A$3.1 billion, while non-branded loans fell a little to $4.3 billion. The overall balance, at $7.4 billion, was unchanged.

The company's loan balance was  $7.7 billion at the end of the 2012/13 financial year.

Homeloans made a net profit of $2.6 million for the six months to December - down 21.9 per cent on the previous corresponding period.

Net interest income fell 9.5 per cent to $3.9 million over the same period.

The company said it expected current trading conditions to prevail in the second half of the financial year.

Last week, Homeloans announced that it had acquired a Brisbane mortgage manager, Barnes Mortgage Management. The deal will add about $500 million to its loan book.