AFG’s Record Growth Raises Questions on Margin Sustainability and Broker Investments
Australian Finance Group (AFG) reports a record half-year profit growth driven by expanding broker network and loan book, setting a strong pace for FY26. The company’s strategic investments and technology upgrades underpin its robust outlook.
- Underlying NPATA rises 43% to $24 million
- AFG Securities loan book grows 24% to $6.3 billion
- Residential settlements increase 19% to $38 billion
- Broker network expands to 4,300 active brokers
- Net interest margin improves by 11 basis points to 124bps
Strong Half-Year Performance
Australian Finance Group (AFG) has delivered a standout performance for the half-year ending December 2025, reporting a 43% increase in underlying NPATA to $24 million. This growth reflects the company’s deepening footprint in Australia’s mortgage broking and lending sector, supported by a robust expansion of its broker network and loan book.
AFG’s active brokers have grown to 4,300, reinforcing its position as the backbone of Australian lending distribution. The company now commands a 77% market share of residential mortgages written by brokers, with residential settlements rising 19% to $38 billion. This momentum is underpinned by a 15% increase in gross profit per broker, reaching $42,000 annually.
Loan Book and Margin Expansion
The AFG Securities loan book, a key driver of earnings, expanded 24% to $6.3 billion, accompanied by an 11 basis point improvement in net interest margin to 124bps. This margin expansion is attributed to disciplined funding strategies, including the renewal of warehouse facilities at improved costs and a $1.2 billion residential mortgage-backed securities issuance with strong pricing outcomes.
AFG’s manufacturing segment, which includes securitised lending through AFG Securities, recorded a 141% jump in EBITDA to $14 million, highlighting the scalability and profitability of its lending platform. The company’s focus on maintaining credit quality is evident, with arrears remaining low and cumulative losses negligible over 15 years.
Technology and Strategic Investments
Technology investments continue to play a pivotal role in AFG’s growth story. The BrokerEngine platform saw a 23% increase in subscribers, enhancing broker efficiency and subscription income, which rose 11% to $11 million. Additionally, AFG’s Broker Investments program, targeting minority equity stakes in broker groups, contributed an annualised $2 million in earnings, with a pipeline poised for further expansion.
These strategic moves not only diversify AFG’s revenue streams but also strengthen its competitive moat amid ongoing industry consolidation. The company’s disciplined capital allocation framework balances reinvestment for growth with shareholder returns, evidenced by a fully franked interim dividend of 4.7 cents per share.
Outlook and Market Position
Looking ahead, AFG anticipates accelerating earnings growth in the second half of FY26, supported by sustained volume momentum, margin strengthening, and operating leverage. January 2026 lodgements surged 23% for residential and an impressive 99% for AFG Securities, signaling robust pipeline growth.
AFG’s entrenched position in Australia’s lending ecosystem, combined with its scalable business model and strong balance sheet, positions it well to capitalise on structural tailwinds such as population growth, credit demand, and broker channel expansion. The company’s focus on higher-margin products and technology-driven services is expected to continue driving shareholder value.
Bottom Line?
AFG’s HY26 results underscore its strategic execution and market leadership, setting the stage for sustained growth and shareholder returns in FY26 and beyond.
Questions in the middle?
- How will AFG sustain margin expansion amid potential interest rate volatility?
- What is the growth outlook and risk profile for the Broker Investments program?
- How will technology enhancements translate into broker productivity and revenue growth?
