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Mortgage Choice’s home loan settlements in the six months to December 2017 went down to $6bn from $6.4bn in the first half of FY17 despite growth in its loan book, as lending policies toughen.
The company’s loan book grew 3.2% to $54bn in the first half of FY18, while net profit after tax on a cash basis was up 7% to $12.5m.
“Home loan settlements are down slightly half on half due to changing market conditions, in particular, tightening lending policies, which can impact conversion from approval to settlement,” chief executive John Flavell told Australian Broker.
The company is likely to ramp up focus on other areas of business, including financial planning, as broking commission revenues decline and as it sees growth in these areas.
Broking accounted for 88.2% of the company’s gross revenues in the first half of FY18, down from 90.2% in the same period of FY17, while the proportion of gross revenue from non-residential lending went up to 11.8%.
Origination and trail commissions received fell by 3.0% to $84.64m on a cash basis from $87.23m in the first half of FY17.
While the company’s number of broking franchises went up to 452 from 449 in the six months to June 2017, its number of brokers or credit representatives was slightly down to 649 by end-December, from 654 six months ago.
The company said gross revenue growth from financial planning and diversified products, up 15.3% and 12.7% respectively, helped offset the decline in revenue from broking commissions, proving the merit of its diversification strategy.
Flavell said the company will continue to grow its business through diversification, increasing broker productivity, and extending its brand presence.
To increase broker productivity, it launched a new website in January and is launching a new broker platform in phases starting this month. Bolstering its brand presence involves growing the number of its retail shopfronts and launching a new advertising strategy.
