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Non-bank lender Liberty Financial Group (Liberty) has released its financial results for the year ending 30 June 2022, revealing that it had record loan originations at just under $5.6 billion over the year, a 36 per cent increase on the prior period.
This included a new record in mortgage lending originations, which were up 28 per cent on the prior year to $3.9 billion, as well as $1.4 billion in secured originations (motor finance and commercial finance), and $259 million from its financial services businesses (including MoneyPlace, nMB and Liberty’s SME loans).
Loan originations ticked up over the second half of the year in all three parts of the group (residential, secured and financial services), despite “an elevated level of customer churn”.
Its full residential portfolio closed the half at $8.7 billion, its secured portfolio at $3.8 billion, and its financial services portfolio at $419 million – a 5 per cent growth on FY21.
Liberty chief executive officer, James Boyle, stated that he was pleased with the record results, particularly given the “extraordinarily competitive nature of activity” in residential mortgages over the year, as well as in motor lending.
“We've driven improvements in financial services off the back of the heightened level of activity across the board in broking and lending distribution channels. And all the while, we have also continued to improve our environmental social governance,” he said.
Speaking to Mortgage Business, he added that there was “no question that [Liberty’s] our long-term partnership with the broking community had driven that growth”, suggesting that nearly 90 per cent of its flows came through brokers.
“The broking community has done just an exceptional job at helping customers re-evaluate their financial needs through this time of change. And so there's this heightened level of activity that's happening in broking – and we saw that [recently] in the AFG results and we've seen it consistently in the APRA numbers that get published.
“We're very proud of the 25-year partnership that we've had with the broking community and that's unpinned the origination growth that we've been able to achieve.”
The CEO added that increasing flows had been seen in near prime and subprime cohorts, adding that segments that had been “particularly positive for [Liberty] in terms of engagement and growth” from the broker channel included commercial, asset finance, SME lending and SMSF lending, as brokers looked to diversify their offering.
He said that the lender would continue to invest in technology and “leveraging digital products” for brokers in the coming year.
Mr Boyle suggested that this would include accelerating full formal approvals and “focusing around how we can better leverage some of the straight-through processing given that we've been able to greatly improve the speed at which we can bring in third-party data”.
Looking ahead, Mr Boyle told investors that the economic circumstances that the lender had been trading in last financial year were “changing rapidly” and warned that the recent interest rate increases and heightened inflation, as well as cost of living “suggests lower credit growth in the period ahead”.
“We do think that they will stimulate continued refinance activity of fixed-rate loans, which are at an all-time high and we feel better positioned to participate in that activity than we were previously when a lot of fixed-rate loans were being written,” he added.
The CEO concluded: “We do expect that there will be net interest margin reduction as funding costs normalise over the coming period. We do expect that we'll be able to continue our accelerated growth in our secured segments particularly through our auto finance partnerships. And we will continue to invest in improved digital experiences to both our customers and our business partners. So that we make it easier and easier for customers to find and engage us with their needs.
“So, in conclusion, we think that we have delivered a very measured growth in financial assets with regard to our portfolio. We finished the year with a strong liquidity position and capital position to support future growth.
"We continue to focus on optimising our earnings through the cycle and think that we've demonstrated the start of that process. And distribution is providing healthy security holder returns,” he said.
Liberty reported an 18 per cent increase in statutory net profit after tax (NPAT) to $219.3 million. After adjusting for non-recurring IPO expenses and non-cash amortisation, growth was up 2 per cent in underlying NPATA to $231.1 million for the year ended 30 June 2022.