A significant increase in commercial lending has seen ASX-listed Yellow Brick Road post strong results for the final quarter of the 2017 financial year amid challenging market conditions.
In a trading update released Friday, YBR noted that its group loans under management grew 21 per cent compared to the fourth quarter of FY16 (PCP) to $44.6 billion.
Overall settlements came in at $3.7 billion over the three months to 30 June, up 3 per cent compared to the same period last year.
“[This is] a welcome recovery under tough lending market conditions,” the group said. “Within this, commercial lending grew 52 per cent vs PCP, helping to diversify revenue.”
The significant growth in commercial settlements comes as the group continues to train and enable its branches to improve lending productivity.
Major aggregator Vow Financial has been a key driver for the group. Vow recorded $1.1 billion in total settlements across its commercial, asset and equipment finance business over the 12 months to 30 June this year.
Speaking at the Vow Financial commercial conference in Hobart last month, the aggregator’s head of commercial and leasing, Glenn Mitchell, explained that more and more brokers are diversifying into commercial lending from within the Vow and YBR networks.
“Just a few years ago, broker market share of the commercial space was sitting at 10 to 15 per cent," Mr Mitchell said. "Today it is up around 35 per cent and growing.”
He added: “Education will play a significant role in growing that share in the years to come.”
Meanwhile, Vow general manager Clive Kirkpatrick highlighted that the group set a new record for settlements in June: “An amazing achievement given the changes in the marketplace.”
“Vow’s commercial and asset and equipment finance business has grown by 75 per cent over the last two and a half years,” Mr Kirkpatrick said. “We plan on growing our commercial business. We are now the fastest growing aggregation group in this space.”
Vow confirmed that all lenders on its commercial panel saw an increase in settlements over the 2017 financial year.
As a diversified financial services group, YBR has also been growing its wealth business, which saw a 36 per cent increase in premiums under management and a 61 per cent surge in funds under management compared to the fourth quarter of FY16.