AFG Posts 39% Profit Surge as Broker Network and Loan Book Expand

Robust Earnings Growth Across Diversified Segments

Australian Finance Group (AFG) has delivered a standout FY26 performance, posting a 39% increase in net profit after tax (NPAT) to AUD 48.5 million. Underlying net profit after tax and amortisation (NPATA) rose 33% to AUD 54.4 million, reflecting broad-based growth across its Distribution and Manufacturing divisions. The company’s underlying return on equity climbed to 23%, supported by improved operating efficiency that lowered the cost-to-income ratio to 55%.

The Distribution segment, which supports a network of more than 4,300 mortgage brokers, saw residential mortgage settlements surge 18% to a record AUD 75 billion. This segment contributed 68% of group EBITDA, with broker services income climbing 13% to AUD 24 million. Meanwhile, AFG Securities, the Group’s Manufacturing arm, grew its loan book by 30% to AUD 7.1 billion, delivering a 107% EBITDA increase to AUD 33.1 million. Net interest margins expanded to 125 basis points, aided by improved funding conditions and record term issuances totaling AUD 2.2 billion.

Scale and Diversification Strengthen Market Position

AFG’s CEO David Bailey highlighted the company’s expanding footprint, noting that one in nine Australian residential mortgages is now written by an AFG broker. This scale enables AFG to invest heavily in technology, compliance, and broker support, fostering faster growth among larger broker groups that are expanding at 2.5 times the market rate. Asset and commercial finance settlements also grew 19% to AUD 4.3 billion, underpinned by the Fintelligence platform and diversified broker demand.

The Group’s earnings mix continues to shift towards recurring and diversified income streams, with around 90% of earnings now underpinned by existing books and subscription-based services. This diversification tempers exposure to short-term housing market volatility and supports sustainable growth.

Capital Management and Shareholder Returns

AFG maintained strong cash flow generation with a 94% cash conversion rate, ending the year with AUD 63 million in unrestricted cash. The Board announced an on-market share buy-back program of up to AUD 15 million, with AUD 3 million of shares repurchased by 30 June 2026. Fully franked dividends totaled 9.5 cents per share for FY26, including a final dividend of 4.8 cents per share declared to be paid on 1 October 2026.

The company’s disciplined capital allocation balances reinvestment in growth initiatives, including technology and broker investments, with shareholder returns. Investments in AFG Securities, broker services, and minority broker equity stakes contributed an estimated AUD 13 million of annualised EBITDA uplift entering FY27.

Governance, Board Renewal and Climate Disclosures

AFG’s governance structure continues to evolve with the retirement of founding director Malcolm Watkins and the appointment of independent non-executive director David Flynn in August 2026. The Board remains focused on prudent risk management, sustainable earnings growth, and upholding high standards of conduct.

FY26 marked AFG’s inaugural mandatory climate-related financial disclosures under AASB S2. The Group reported low direct greenhouse gas emissions, offsetting its Scope 1 and 2 emissions through voluntary carbon offsets. Climate risk management is integrated into the Board’s oversight and enterprise risk framework, with a focus on potential impacts to the lending portfolio from physical and transition climate risks. Scenario analysis indicates the business model is resilient across a range of climate futures, with no material financial impacts identified for the near term.

Outlook Amid Market Uncertainty

Entering FY27, AFG benefits from a larger lending book, improved funding diversity, and a growing broker network. While residential lodgements have softened recently due to changing tax policies and cost-of-living pressures, the underlying demand for housing remains intact. The broker channel’s role as a trusted advisor is expected to grow as borrowers navigate a complex lending environment.

AFG’s capital-light distribution platform, diversified earnings base, and strong broker relationships provide resilience through market cycles. The Group plans to continue investing in technology, broker support, and its lending business to drive long-term shareholder value despite uncertain economic conditions.

Investors will be watching how AFG balances growth investments with capital returns and how its climate risk management evolves alongside regulatory developments.