Australian Finance Group Ltd. · ASX:AFG
Australian Finance — Macquarie Australia Conference 2022
31 slides from Australian Finance's conference presentation, May 5, 2022
Slide 1: Macquarie Conference Presentation
Market Release 5 May 2022 For personal use only Market Announcements Office ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam MACQUARIE CONFERENCE PRESENTATION The Company will address the Macquarie Australia Conference today. Attached is the accompanying presentation. Auth
Slide 2: Australia Conference
Australia Conference
Slide 3: Important Disclaimer
Important Disclaimer For personal use only This presentation contains general information which is current as at 4 May 2022. The information is intended to be a summary of Australian Finance Group Ltd (AFG) and its activities as at 31 December 2021 and does not purport to be complete in any respect.
Slide 4: Corporate highlights
Corporate highlights For personal use only AFG is one of Australia’s largest residential mortgage aggregators, continuing to deliver growth in profitability and shareholder returns through successfully expanding into higher margin lending services 1. As at April 2022 2. As per H1 FY22 results, share
Slide 5: Our journey: Delivering growth and value
Our journey: Delivering growth and value For personal use only Listed on the ASX in May 2015 with a view to grow our distribution and build scale, and use this to drive margin growth Strategy is delivering results with established track record of earnings growth $51.3m Normalised NPAT $38.1m $33.3m
Slide 6: The Australian finance industry
The Australian • Residential mortgages finance industry For personal use only • Commercial mortgages Financial requirements accessed • Retail asset finance through brokers or direct with lenders • Commercial asset finance • Australian residential and commercial lending markets total • Personal loans
Slide 7: AFG strategy for growth
AFG strategy for growth Diversified business model built on a strategy of growing mortgage aggregation market share, and growing For personal use only margins through expanding upstream into lending and across into non-residential asset classes 3 Direct lending $0.94 billion $4.03 billion loan book
Slide 8: Transformation continues
Transformation For personal use only continues • Profit mix shift from aggregation to higher-margin lending continues to drive growth. The future development of an Asset Finance lending product will further accelerate growth • Aggregation payout ratio beginning to stabilise however the market remain
Slide 9: Fintelligence broadens AFG's broker offering
Fintelligence broadens AFG’s broker offering For personal use only A fast-growing, profitable technology-based asset finance aggregation platform based in Queensland, with NPAT expected around $6.6 million in full year FY22 on a pre-acquisition basis1 350+ $513 M 182% 30+ < 3% Brokers at NAF in HY22
Slide 10: Macro economic environment
For personal use only MACQUARIE AUSTRALIA CONFERENCE Macro economic environment
Slide 11: AFG is well positioned
AFG is well positioned For personal use only • A key player in lending market – 1 in 10 Australian mortgages written by an AFG broker Broker and lending market • Australian broker market share 67% at Dec 2021, up from 57% in Dec 2016 • Home ground advantage with extensive industry knowledge • Increa
Slide 12: Rising rates and residential mortgages
Rising rates and For personal use only residential mortgages Impact of rising interest rates • Historically the residential mortgage market has performed strongly during periods of rising interest rates • Usually coincides with high volumes of lending activity that typically flattens or increases du
Slide 13: AFG's proven performance in rising rate environment
AFG’s proven For personal use only performance in rising rate environment • AFG's volumes increased significantly and outperformed overall market during the last period of increasing interest rates • AFG’s offering is compelling in a competitive market: ✓ Balance sheet strength ✓ Industry-leading co
Slide 14: Opportunity for AFG white label and securitised lending
Opportunity for AFG white label For personal use only and securitised lending • Funding markets remain open and attractive. Expected to continue to function normally • Recent term transaction resulted in greater warehouse capacity and locks in funding for those assets for 5 years at a competitive pr
Slide 15: Credit risk and margins
Credit risk and margins For personal use only Residential mortgages generally perform well across the cycle • Residential mortgages perform well even during times of stress such as the GFC • Lenders have historically responded in rising interest rate environments and adjusted rates to customer to ma
Slide 16: AFG Securities losses and arrears
AFG Securities losses and arrears For personal use only Number of loans Loss to AFG Losses since commencement in 2007 Total 35 $260,206 • $260k in losses incurred with the bulk originated in our initial Legacy Loans 17 $228,115 warehouse, which funded predominantly low doc and high Loans written Pos
Slide 17: Residential mortgage performance
Residential For personal use only mortgage performance Residential mortgages perform well even during times of stress • RBA data demonstrates that through the GFC, lending to households and housing loans continued to perform well • During COVID lockdowns, the banks’ loan performance shows that while
Slide 18: Outlook
For personal use only MACQUARIE AUSTRALIA CONFERENCE Outlook
Slide 19: March 2022 trading
March 2022 trading For personal use only • Residential lodgements 6% above March 2021 at $9.13 billion • AFG Home Loans lodgements up 10% compared to March 2021 6% • AFG Securities lodgements 22% higher than March 2021. Settlements were 62% higher 13% 5% 7% • Positive growth in all states, particula
Slide 20: In conclusion
In conclusion For personal use only Leading aggregation platform Leveraging into higher margin products • 3,525+ Brokers inc Fintelligence, up from • Growing AFG Securities book (the most 2,394 at Jun 2015 powerful margin driver of AFG) • 1 in 10 Residential mortgages through an AFG broker Capital l
Slide 21: Thank you
For personal use only MACQUARIE AUSTRALIA CONFERENCE Thank you
Slide 22: Appendices
For personal use only MACQUARIE AUSTRALIA CONFERENCE Appendices
Slide 23: About AFG
Our purpose About AFG For personal use only Brokering a better future • We exist to create competition and financial Diversified business model continuing choice for Australians by protecting and to deliver growth in profitability and shareholder returns supporting our brokers, and championing the i
Slide 24: AFG today
AFG today Diversified business model continuing to deliver For personal use only growth in profitability and shareholder returns Income model Opportunity Margin driver Broker originated loans that are funded by lenders Increase monthly originations by AFG brokers Average Upfront net of clawbacks of
Slide 25: Financial strength supports growth
Financial strength For personal use only supports growth Low risk/high value annuity style assets, aggregation and white label trail books, and AFG Securities loan book providing strong cash flow Capital light business model, growth through acquisition with commensurate or measurable returns and a r
Slide 26: HY22 results highlights
HY22 results highlights Diversified business model continuing to deliver growth in profitability and excellent For personal use only shareholder returns • Strong financial performance for the half with growing confidence for the balance of the financial year • Excellent growth in our own branded pro
Slide 27: HY22 Financial Results
HY22 Financial Results For personal use only 1H22 1H21 $000’s $000’s • Revenue up 31% in HY22, with higher settlements Total Revenue 481,233 366,386 31% and growing loan books across product classes Gross Profit 61,298 49,686 23% NPAT reported 30,033 24,967 20% • Reported NPAT $4.1m higher than unde
Slide 28: HY22 Summary Cash Flow
HY22 Summary Cash Flow 1H22 $000’s 1H21 $000’s For personal use only Cash flows from Operating activities AFG maintains a capital light business model with Cash receipts from customers 353,643 288,911 strong cash flow generation. Trail book and AFG Cash paid to suppliers and employees (350,523) (272
Slide 29: HY22 Summary Balance Sheet
Dec 2021 Dec 2020 Note $000’s $000’s Assets HY22 Summary Unrestricted Cash Restricted Cash 84,094 160,946 116,656 74,469 For personal use only Balance Sheet Receivables and other assets Financial Asset 1 15,694 15,000 10,861 - Contract Assets 2 1,121,021 1,005,824 Well capitalised net cash balance s
Slide 30: AFG Securities Portfolio
AFG Securities Portfolio For personal use only Significant book growth achieved while maintaining overall credit quality 29
Slide 31: Our investments
Our investments For personal use only Strategic investments have expanded our aggregation, technology, distribution and lending capabilities, and will continue to drive growth for shareholders Commercial Mortgage Alternative residential Better customer Leading Asset Finance Advanced workflow lending
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