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Mortgage Choice saw its net profit after tax (NPAT) rise by an annualised 3.3% to $23.4m in FY2017, according to the firm’s latest financial results, released Tuesday.
The firm’s core broking business posted a cash NPAT of $22.75m, up 4% year-on-year. Its loan book at the end of June reached $54.6bn (a 2.3% growth), however, settlements – which reached $11.5bn – were down 7%.
“[D]espite the strength of our brand and customer offering, settlements in FY2018 declined in a flat market and we are not growing our franchisee numbers,” Mortgage Choice CEO Susan Mitchell said.
“Through a thorough consultation process with franchisees it became very clear we needed a more competitive remuneration structure and needed to adjust the way we deliver our services, so that we can grow our network and market share,” Mitchell added.
In June, an investigation by Fairfax and ABC revealed many franchisees had been left finically worse off due to low commissions and unrealistic targets. Further, 170 – almost half the network – were considering legal action.
The CEO believes Mortgage Choice’s new hybrid broker remuneration model, introduced in July, will provide franchisees with higher pay and reduce their “income volatility”. She said this will enable them to invest in their businesses while attracting new, high quality brokers. Mitchell also revealed that more than 80% of broker franchisees have already adopted the new model.
This 2018, the firm invested $3.4 million in its new broker platform, which will enter pilot phase before its roll-out to franchisees by the next fiscal year.
“Our new broker platform was built by our in-house team of talented technology professionals to meet the specific requirements of the business and will enable our network to operate more efficiently while improving the overall customer experience,” said Mitchell.
Looking ahead, Mortgage Choice maintains a sound outlook for the mortgage broking industry amid a “complex lending environment” arising from an increase in wholesale funding costs, regulatory changes and tightening lending policies, as borrowers seek advice from qualified professionals.
“As we head into FY2019, we are confident the changes we have introduced will see us grow settlement volumes and market share over the medium to long-term. Having a greater share of revenue should enable our network to invest in their businesses while attracting new, high quality franchisees and loan writers to the network. At the same time, we continue to look at ways in which we can improve efficiencies,” said Mitchell.
“More than half of all home loans each year are originated by mortgage brokers, and I am confident borrowers will look to our well-known and trusted national brand for one of the best consumer propositions in the market,” she continued.
