Australian Finance Group used its 2026 AGM to highlight a stronger, less volume-dependent earnings base after statutory profit rose 39% in FY26. AFG Securities’ loan book has since reached $7.3 billion, while recent investments are expected to add $13 million to FY27 EBITDA under stated assumptions.
- Statutory NPAT rose 39% to $49 million in FY26
- AFG Securities loan book reached $7.3 billion in September
- FY27 investments expected to contribute $13 million of EBITDA
- Full-year fully franked dividend increased to 9.5 cents per share
- 90-day arrears improved to 0.58% of the loan book
AFG outlines earnings uplift beyond mortgage volumes
Australian Finance Group Ltd (ASX:AFG) says investments across lending, broker services and broker businesses are expected to contribute an additional $13 million of EBITDA in FY27, even assuming its AFG Securities loan book remains at $7.1 billion and net interest margin holds at 120 basis points. The book has already grown beyond that base, reaching $7.3 billion at the end of September.
The disclosure came as AFG presented its FY26 performance to shareholders, confirming statutory net profit after tax of $49 million, up 39% on the prior year. Underlying NPATA rose 33% to $54 million, EBITDA increased 32% to $74.4 million and operating cash flow climbed 42% to $51 million. The company’s FY26 profit result had previously highlighted the same sharp increase in profit and expansion of the lending book.
Loan book growth meets improved funding conditions
AFG Securities’ loan book was 28% above a year earlier in September, despite quarterly lodgements of about $1.1 billion running 18% below the corresponding period. Retention remained steady and runoff was described as consistent with FY26, suggesting the latest growth was not presented as a result of unusually low repayments.
Funding has also moved in AFG’s favour. One warehouse facility was renewed below existing pricing, while a new $1.2 billion residential mortgage-backed securities transaction was priced inside existing warehouse costs. Including that transaction, 71% of the AFG Securities book was funded on improved terms at September, and total issuance under the programme reached $13.1 billion across 21 transactions. Earlier term funding transaction coverage had also pointed to favourable pricing and reduced cash-rate sensitivity.
Net interest margin expanded by nine basis points during FY26 to 125 basis points, with an exit margin of 128 basis points. Credit performance improved at the same time: loans 90 days or more in arrears represented 0.58% of the book, or 56 loans, compared with 0.74% a year earlier. Those measures are important to the earnings case, but the company’s forward estimates remain exposed to funding costs, interest rates, credit outcomes and the pace of loan-book growth.
Recurring broker income becomes a larger earnings pillar
AFG brokers settled $75 billion in residential loans during FY26, an 18% increase, while the network grew beyond 4,300 brokers supporting more than 600,000 customers and access to over 80 lenders. Distribution EBITDA rose 4% to $71 million, a more modest increase than group profit but one that the company said reflected continued investment in broker capability.
Broker Services now represents 23% of Distribution gross profit, up from 20% at the first-half FY25 stage, with AFG aspiring to reach 30% by FY29. BrokerEngine has more than 4,400 users, nearly one-fifth of them brokers from other aggregators, while the Broker Investments portfolio expanded from two holdings to six during FY26. AFG says only about 10% of its earnings now comes from short-term residential upfront commissions, and estimates that a 10% change in settlements would affect NPAT by about 3%.
Shareholder returns rise despite market valuation frustration
The board declared a fully franked final dividend of 4.8 cents per share, taking the full-year dividend to 9.5 cents and the payout ratio to 60%. Dividends and the on-market buyback together returned $30 million during FY26, while $21 million was reinvested in AFG Securities, technology and broker investments. The June share buyback was announced as a programme of up to $15 million.
Chair Greg Medcraft acknowledged that AFG’s share price had not kept pace with the company’s reported performance, an issue he said had been felt across the sector. The company’s first-quarter AFG Index data showed $26.8 billion of broker lodgements, well above historical averages, although below the unusually high level of a year earlier. Upgraders accounted for 46% of lodgements, refinancing for 15% and first-home buyers for 12%.
FY27 execution faces rates and housing-market tests
AFG says higher interest rates are constraining borrowing capacity, while the need for further monetary tightening remains uncertain. It also expects refinancing activity could rise as borrowers respond to the latest rate increase and the gap between new and existing loan pricing widens. The company’s longer-term case rests on population growth, housing undersupply and the continued role of brokers in helping borrowers navigate affordability and lender choice.
The AGM also marked board change, with co-founder Brett McKeon retiring as a non-executive director after the meeting and David Flynn having joined as an independent non-executive director in August. Proxy materials showed 97.24% support for Flynn’s election, but the supplied announcement does not state the final poll result. The more consequential test now sits in the operating numbers: whether funding gains, recurring broker income and the larger securities book can deliver the promised earnings uplift without a deterioration in credit quality.
Bottom Line?
AFG has presented a stronger earnings mix, but FY27 will test whether funding advantages and recurring income can offset a more difficult rate environment.
Questions in the middle?
- Can AFG maintain a 120 basis point or better net interest margin as rates and funding costs move?
- Will the $13 million FY27 EBITDA uplift emerge as the loan book, Broker Services and investments scale?
- Can broker lodgements and refinancing activity hold up if borrowing capacity remains constrained?