Powered by MOMENTUM MEDIA
subscribe to our newsletter
Mortgage group suffers $4 million loss

Mortgage group suffers $4 million loss

A listed mortgage group has seen a substantial loss in its 2014 full-year results.

Firstfolio Limited yesterday announced a net loss after tax of $4.1 million, a considerable fall from the $1.3 million profit achieved in the previous financial year.

Firstfolio’s revenue decreased 4.2 per cent to $78.6 million, primarily driven by wholesale business where mortgage settlements fell by 42 per cent over the 12 months to June 30.

Advertisement
Advertisement

The group’s underlying cash net profit after tax was $2.5 million, down 58.3 per cent from $6.0 million in the previous financial year.

However mortgage settlement volumes increased 15 per cent over the previous year to $3.2 billion and the group’s aggregation and broking volumes increased 23.1 per cent in the 12 months to June 30.

Firstfolio chairman Mr Eric Dodd said the results reflect lower margins associated with ongoing competitive conditions in the Australian mortgage market, which significantly impacted the group’s wholesale business, and a number of “one-off items” in its results.

“Our accounting result does not reflect the strong underlying cash flow performance of the company,” Mr Dodd said.

“Our $18 billion loan book continues to perform ahead of expectations and is anticipated to remain a strong cash contributor to the business,” he said.

Mr Dodd noted a number of challenges during the year, including leadership changes and the termination of a significant equity transaction.

In June, major shareholder Tony Wales agreed to purchase the group’s $58.4 million senior debt facility from CBA via his company Welas Pty Limited.

The company is in the process of renewing a warehouse facility from Westpac , drawn to $147.0 million at June 30.

“While these matters contributed to additional one-off costs and adversely impacted the confidence of some business partners in dealing with the company, pleasingly, these short-term issues are now resolved,” Mr Dodd said.

Firstfolio’s loan book declined to $18.2 billion, with 60 per cent of the $0.7 billion run-off attributable to the active loan book, and 40 per cent to the inactive loan book.

“The active loan book of $17.4 billion now comprises 96 per cent of the total book, and although the rate of run-off has slowed, run-off exceeded new loan origination,” Mr Dodd said.

“Reflecting the mix in settlements, wholesale loans now represent 19.5 per cent of the loan book; aggregation and broking loans, 79.6 per cent; and Firstfolio Capital contributed the remaining 0.9 per cent,” he said.

In the coming year, Mr Dodd expects the group to benefit from ongoing improvements in settlement volumes across the Australian market, but stressed that the lending environment will remain highly competitive with pressure on margins continuing.

 

Mortgage group suffers $4 million loss
mortgagebusiness

 

Latest News

Westpac and the Commonwealth Bank’s share of the third-party mortgage market has spiked, in contrast to sharp declines from NAB and ANZ, t...

A non-major lender has dropped its fixed mortgage rates, becoming the fourth lender to reprice its offerings over the past two weeks.   ...

The interest lenders earn on mortgages is expected to remain under pressure this year and next, according to Moody’s. ...

FROM THE WEB
podcast

LATEST PODCAST: What drops in fixed rates may mean for the mortgage market

Do you think the banking royal commission recommendations could negatively impact competition in the mortgage market?