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Non-bank sees mortgage book rise 24%

A wealth management company has reported that its mortgage book grew to $39.4 billion in the first quarter of the financial year 2017, a 24 per cent rise on the same period last year.

Yellow Brick Road Holdings Limited — which recently transitioned to a franchise model after three years of acquisitions and a $20 million brand investment — announced that its loan book had grown by a nearly a quarter since the prior comparative period (PCP) in FY16. It is thought that this is partly due to the acquisition of mortgage manager Loan Avenue earlier this year.

As well as strong mortgage book performance, the group delivered $3.9 billion in settlements during the first quarter of the financial year 2017, the third highest result in the group’s history.

While the result was 3 per cent down on the first quarter of the financial year 2016, the higher-margin Yellow Brick Road lending business saw settlements grow at 18 per cent on PCP behind sustained enquiries.

Company secretary Richard Show noted that while Vow Financial aggregation settlements were down 9 per cent on the same period last year, this was largely “due to the impact of regulatory pressures on lending practices”, which had also contributed to the group’s “disappointing” $9.5 million loss earlier this year.

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However, settlements were up 12 per cent on the last quarter of the financial year 2016 for Vow Financial.

The report added that despite the overall drop year-on-year, there was “little impression on the bottom line” for Vow, and that “momentum is evident”, due to the fact that the three-month period ending September 2016 was the third consecutive quarter of increased applications.

Mr Shaw noted that the growth in settlements for both Vow Financial and Yellow Brick Road networks were underpinned by growth in broker numbers, which increased by 30 per cent to nearly 1,600 qualified representatives. 

He added that the Yellow Brick Road network increase was also supported by “high-quality digital leads”.

‘Cost restructuring will continue to have positive effects’

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Overall, the group’s net operating cash result for the quarter was a $980,000 deficit, down from $1.54 million on PCP, which is reportedly “a strong result in a period where cash inflows are typically low”.

Further, the group saw an improvement in its net underlying operating cash surplus (deficit) from $900,000 to $170,000 due to “recent cost restructuring and greater scale”.

For the quarter, acquisition and integration payments grew to $800,000 as a large portion of Loan Avenue-related acquisition expenses were booked.

The group added that a new distribution agreement that gives group brokers access to Australian Military Bank’s range of Defence Home Ownership Assistance Scheme Loans (which provide “generous subsidies” to help defence personnel purchase their own home), has extended the reach of YBR in “key markets”, like far north Queensland.

The quarterly commitments report reads: “Going forward, our underlying wealth business is trending positive; integration outflows will reduce significantly in the second half of FY17, and our cost restructuring will continue to have positive effects. We remain on track to meet market expectations.”

As well as releasing its quarterly report, the group also recently announced the appointment of a new general manager to lead the company’s new franchise business.

Former Aussie Home Loans state manager of NSW and ACT, Andrew Rasby, was named the new general manager of lending at Yellow Brick Road earlier this week and has been tasked with running the ASX-listed group’s national franchise network.

The group is also aiming to target wealth penetration of 30 per cent of its client base by growing its network to 300 branded branches and 1,000 broker groups.

[Related: Bouris cuts staff, announces major company restructure]

Non-bank sees mortgage book rise 24%
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Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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