A listed non-bank lender has recorded a fall in profits as market pressures squeeze margins.
Homeloans Ltd announced a net profit after tax of $6.3 million, down 6.1 per cent from the $6.7 million over the 2012/2013 financial year.
Net interest income also slipped by 13.2 per cent from $9.7 million to $8.4 million.
Homeloans-branded mortgage settlements increased 13.2 per cent over the 12 months to June 30, while the lender recorded a total loan book of $7.6 billion.
Commenting on the result, chief executive Scott McWilliam said the year had been marked by intense competition, particularly heavy discounting by the major banks.
“Year-on-year, we always focus on growing lending volumes and this year was no exception,” Mr McWilliam said.
“We were especially buoyed by strong settlements in the second half of 2013/2014,” he said.
“However, continued market pressures impacted on margins, which, in turn, caused slightly reduced profit levels compared to 2012/2013.”
Noting the significant improvement in the broader residential lending market, where housing credit growth was 6.4 per cent over the year, Mr McWilliam said the company has grown its third-party and direct settlements by 12 per cent and 17 per cent, respectively.
“In line with Homeloans’ strategy of being a home loan solution provider, the company expanded its product suite in the second half of 2013/2014 with the launch of the Homeloans Optima product,” he said.
“During 2013/2014, branded loans under management increased 2.3 per cent to be $3.0 billion at year end.”
To offset margin pressures in the market, Homeloans Ltd continued to improve operating efficiencies, such as back-office process improvements, Mr McWilliam said.
“As a result, the company’s underlying operating expenses declined in 2013/2014 to $14.9 million ($16.2 million in 2012/2013),” he said.
“Lowering the company’s cost base ensures we are able to remain customer orientated.”