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Yellow Brick Road (YBR) has released its interim report for the 2022 financial year, which despite a 71.2 per cent year-on-year surge in new settled loans, revealed a net loss after tax of $377,000.
The company has outlined its efforts to grow revenue and margins across its businesses, as it has copped “abnormally high” loan book run-off rates, in an intensely competitive market.
YBR has invested in building out its retail distribution, its securitisation business and its digital platform, Y Home Loans.
Notably, the group’s operating expenses were up by $2.1 million, or 24.1 per cent, year-on-year, to a total of $10.8 million during the half-year, as it spearheaded its growth initiatives.
Across the retail and securitisation segments, there has been a focus on recruitment, including the addition of more brokers to YBR’s network.
“Headcount has been increased to build up internal underwriting teams to support the program,” YBR reported on the resi wholesale funding business.
“Investments are being made in IT systems and infrastructure to improve productivity as volumes grow.”
The pursuit for growth was also reflected in the soft launch of yhomeloans.com.au, a digital mortgage broking platform.
The group has argued that the digital offering, Y Home Loans, will provide the “best mortgage distribution model”, with the combination of an online mortgage business working alongside two market-facing mortgage businesses, the YBR franchise and Vow brokers.
However, the group has signalled plans to expand Y Home Loans from a sole website, with the launch of an app later this month.
The new app will supposedly mirror the website’s home loan application capabilities, as well as “nudge and notify borrowers” to contact YBR brokers.
Further, the app is intended to eventually feature customer behavioural data learnings, which would sort “borrower type associated with tracking visits, location, time spent, articles read and interactions”.
YBR’s digital marketing team has already commenced the development of the algorithm.
“This will enable us to understand what the digital footprint of a borrower looks like well before a loan is applied for,” the report stated.
In January, Yellow Brick Road also saw its senior debt facility limit rise by $200 million, to a total of $450 million.
A rise in loans but drop in profits
The group reached $10.7 million in new settlements, while its underlying loan book rose by 7 per cent, from the same period the year before, to $55.3 billion.
Revenue had boomed by almost 61 per cent year-on-year, escalating to more than $144.5 million.
However, while YBR saw increases in its lending and revenue, it also reported a net loss after tax of $377,000 – in contrast to its $231,000 net profit in the first half of FY21.
[Related: Auswide home loans up by 5.2%]