REA Group Ltd has announced its results for the first half of the 2021 financial year (FY21) ended 31 December 2020, reporting a 13 per cent increase in its net profit to $172.1 million.
The group’s underlying revenue has fallen by 2 per cent to $430.4 million, while its earnings before interest, taxes, depreciation, and amortisation (EBITDA) – including associates – has risen by 9 per cent to $290.2 million.
According to the group, the results “reflect the diverse effects of the COVID-19 pandemic across the group’s Australian and international businesses”.
The financial services business – which includes mortgage broking franchise Smartline Home Loans – has reported a 12 per cent increase in operating revenue, driven by higher settlements and improved broker productivity.
However, this was “more than offset” by a non-cash adjustment to the valuation of expected future trail commission, which the group said has decreased due to faster loan run-off rates amid the current low interest environment.
In addition, there was a decrease in partnership revenue as the current agreement performance payments with the National Australia Bank (NAB) have reached maturity.
The group also reported a 13 per cent reduction in operating costs for H1 FY21, explaining that all cost categories have decreased due to a combination of ongoing cost management initiatives, COVID-19-related savings, and pausing some marketing expenditure into the second half.
Commenting on the results, REA Group CEO Owen Wilson said: “We have delivered a remarkable first half result, particularly given the Melbourne market came to a virtual standstill during the lockdown.
“I am proud of the way our teams focused on the things we could control to deliver outstanding customer support and product enhancements to help consumers navigate the disruptions.”
Mr Wilson also noted that the property market has accelerated again, showing signs of a strong recovery in November and December.
“This was fuelled by the easing of COVID-19 restrictions, combined with increasing consumer confidence, record-low interest rates and healthy bank liquidity,” Mr Wilson said.
REA Group’s financial services operating income is generated from the activities of Smartline and the NAB partnership, including realestate.com.au Home Loans.
Through its ownership of Smartline, the REA Group now has more than 400 brokers in market.
[Related: REA Group braces for settlement slump]
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.