YBR reports loan book growth

Yellow Brick Road (YBR) has released its preliminary results for the 2020 financial year, reporting a 1.7 per cent increase in underlying loan book to $50.2 billion, up from $49.4 billion in FY19.

Net present value of the loan book decreased by 0.5 per cent, from $44.9 billion in FY19 to $44.6 billion in FY 20.

YBR reported that net present value of loan book per ordinary share is 13.8 cents in FY20, down from 15.8 cents in FY19.

The group’s cash flow from operating activities has returned to positive territory, up from -$95,000 to $3.7 million.

The profit for the group after providing for income tax also returned to positive ground, totalling $5.96 million, and up from the FY19 loss of -$37,394.

YBR has attributed its FY20 results to three factors, including the simplification of the business with a focus principally on mortgages, restructuring of the cost base to better reflect the business’ strategic direction, and a focus on the Vow and YBR distribution network, including recruitment, education and compliance.

In addition, the group also attributed the results to its decision to enter a 50/50 Resi Wholesale Funding joint venture with Magnetar Capital and the commencement of its mortgage securitisation program under the Resi and YBR home loan brands.

During the financial year, the group also sold its 50 per cent equity interest in Smarter Money Investment Pty Ltd for a consideration of $7.5 million, which resulted in a net gain on disposal of $6.95 million recorded in profit and loss.

Further, the group sold its wealth business for over $1.9 million, which resulted in a net gain on disposal of $225,000 recorded in profit or loss.

Impact of COVID-19

YBR reported that the coronavirus pandemic has not had a significant impact on its results up to 30 June, but underscored that it is not practical to estimate the impact after this reporting date.

It has not received the federal government’s JobKeeper package, but said it has benefited from the deferral of tax-related payments, which have been included in creditors at 30 June.

“The situation is rapidly developing and is dependent on measures imposed by the Australian government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided,” YBR said in its report to the ASX.

“The potential impacts of COVID-19 will continue to be closely monitored, especially for any downturn in the Australian residential property market and reduction in loan settlements.”

These risks will increase if the level 4 restrictions currently in Melbourne are extended to other parts of Australia, the group warned.

“To mitigate the impact of COVID-19, the major suppliers have allowed borrowers’ loan repayments to be deferred,” it said.

“The company continues to receive and pay trail commission on deferred loans.”

The group said it has implemented measures, particularly expense containment, to tackle the impacts of COVID-19.

[Related: YBR reports settlement, book growth]