Brokers drive Liberty’s loan originations

Non-bank lender Liberty Financial has published its half-year results for the 2021 financial year (1HFY21), posting a statutory net profit after tax (NPAT) of $83 million, up 12 per cent from $74.3 million in 1HFY20.

After removing non-recurring initial public offering (IPO) expenses and non-cash amortisation, the non-bank’s underlying NPAT has increased by 58 per cent in 1HFY21 compared with 1HFY20, from $74.3 million to $117.7 million.

The increase was underpinned by growth in the residential mortgages segment, which has recovered after declining in the second half of 2020.

The segment has totalled $8.53 billion in 1HFY21, up from $8.45 billion in 2HFY20, and $8.52 billion in 1HFY20.

The non-bank told Mortgage Business that it has recorded an 11 per cent growth in new loans written as at 31 December, with total loan originations of $2.1 billion. According to Liberty Financial chief financial officer Peter Riedel, the broker channel originated a total of $1.6 billion of these new loans.

Commenting on the results, Liberty CEO James Boyle said that a significant driver of the lender’s growth has been the mortgage broker channel and “the great work that mortgage brokers have done to help manage the challenges of COVID-19”.

“The vast majority of our loans are originated through the broker channel; it would be north of 80 per cent,” Mr Boyle told Mortgage Business.

“The impact of COVID-19 has meant that there have been so many customers who have been in need of help and broader help from mortgage brokers as well.”

Liberty Financial has also reported a reduction in customers impacted by the COVID-19 crisis to 2 per cent of the portfolio as at 31 December 2020, compared with 10 per cent as at 30 June 2020.

While Mr Boyle said that customers had demonstrated “tremendous resilience” during the pandemic, he added the lender has remained “cautious” about its yearly results given the climate of continuing uncertainty.

“Notwithstanding the improved financial position of our customers, economic and social uncertainty continues, which means we remain cautious about our FY21 results,” Mr Boyle said.

According to Mr Riedel, the lender had issued three securitisations in 2020, totalling $2.3 billion in the second half of 2020.

Low rates of loan deferrals

Only a fraction of a per cent of the non-bank’s customers are still in loan repayment deferral arrangements introduced during the coronavirus pandemic, with Mr Boyle stating that less than 1 per cent had deferred their loans during the peak of the COVID-19 crisis in 2020.

“Right from the start of COVID-19 our position is that we think it’s better for customers if they can keep paying because if they defer payments it costs them more interest,” Mr Boyle told Mortgage Business.

“Even at the start of COVID-19 we tried to help customers understand this in order to help their financial circumstances through the challenges.

“We think a lot of other lenders were very quick to offer loan payment deferrals to many customers and didn’t have either the time or the capacity or the approach that sought to explain to customers why it was perhaps better that they keep making payments.”

[Related: Greater Bank notes trend in early repayments]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.