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Despite posting a positive set of results, one leading home loan brokerage has raised concerns about losing market share, as most property markets around the country continue to cool.
Mortgage Choice chief executive officer Susan Mitchell said that while there were some positive aspects to the results, Mortgage Choice was losing market share and a change program is required to ensure the business has a platform for sustainable growth.
“Through a thorough consultation process with franchisees, it became very clear we needed a more competitive remuneration structure and needed to adjust the way we deliver our services so that we can grow our network and market share,” the CEO said.
“The new hybrid broker remuneration model will provide franchisees with higher pay and reduce their income volatility, enabling them to invest in their businesses while attracting new, high-quality brokers.”
Mortgage Choice announced its annual results yesterday for the financial year ended 30 June 2018. The results are in line with guidance provided in July when the company announced its new broker remuneration framework and operational changes.
Financial highlights are that cash NPAT was $23.4 million, up by 3.3 per cent on FY2017, while underlying statutory NPAT was $25.6 million. The final result for FY2018 was $4.2 million due to a $7.1 million positive adjustment to net NPV receivable for changes in run-off and other assumptions, and a one-off, non-cash adjustment of $28.5 million due to the new broker remuneration model being introduced.
The company’s core broking business recorded cash NPAT of $22.75 million, up by 4 per cent on FY2017, and its loan book as at 30 June 2018 was $54.6 billion, up by 2.3 per cent on FY2017. Its financial planning gross revenue was $11.3 million, up by 10.4 per cent on FY2017, and its net profit grew by 116 per cent.
Ms Mitchell said that in FY2019, the management team will be focused on further implementing its change program, rolling out the new broker platform.
“The outlook for the mortgage broking industry remains sound, with a combination of factors — including an increase in wholesale funding costs, regulatory changes and tightening lending policies — creating a more complex lending environment.
“We are confident the changes we have introduced will see us grow settlement volumes and market share over the medium to long term. Having a greater share of revenue should enable our network to invest in their businesses while attracting new, high-quality franchisees and loan writers to the network.”
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