Liberty reports growth in new customers, profit and total assets

  • Before tax profit of $76.3m ($73.7m in 2016) (+4%)
  • New loan originations of $3.7b ($2.5b in 2016) (+48%)
  • Total assets of $7.5b ($5.4b in 2016) (+40%)
  • Acquired National Mortgage Brokers (nMB) with broker headcount of 400
  • Foundation sponsor of Stone & Chalk’s new Melbourne hub
  • Successfully issued $3.1 billion in asset backed and senior unsecured securities

Leading non-ADI lender, Liberty today reported a stronger consolidated profit before tax of $76.3 million (vs $73.7 million) following an increase in new loans ($3.7 billion vs $2.5 billion) and total assets ($7.5 billion vs $5.4 billion).

James Boyle, Chief Executive Officer, said the consolidated results for Australia and New Zealand reflected a year of solid performance by the group, which would enable Liberty’s ongoing investment in products and services to help more people get financial.

“Over the year we achieved a profit before tax of $76.3 million whilst also increasing new loans by nearly 50 per cent and our loan portfolio by nearly 40 per cent. We did this whilst also continuing to invest in our business for the future with improvements in technology, decision sciences and marketing.

“Our philosophy of continuous improvement is focused on the evolving expectations of our customers and business partners. That’s meant we’ve been able to navigate the significant changes in the lending market over the last year while delivering these results.

Mr Boyle said Liberty had made other operational enhancements to support the growth of the business, including launching a new broker portal and increased investment in staff training.

In August 2017 Liberty acquired National Mortgage Brokers (nMB), a broker group of nearly 400, from Aussie Home Loans. nMB complements the existing Liberty Network Services’ platform of 120 advisers, considerably expanding distribution capabilities and giving more consumers access to Liberty.

“We’ve invested to prepare ourselves for a new normal. An environment characterised by increasing customer expectations, especially with respect to self-service and digital engagement, and significantly greater regulation,” Mr Boyle said.

Mr Boyle said whilst there was lack of clarity surrounding the proposed APRA regulated non-ADI Lender Rules, Liberty was engaging with Government and APRA to better understand the impact of the proposed legislation.

“While we do not believe there is a need for APRA to have extended powers over non-ADIs, we will work collaboratively with the regulator to create sustainable competition and maintain a stable financial system, while continuing to apply astute risk management,” Mr Boyle said.

Peter Riedel, Chief Financial Officer, said the modest growth in net profit before tax of 4 per cent reflected significant investment in people and Liberty’s technology platforms, combined with a prudent increase in provisions for possible future loan impairment.

“Our workforce increased by 37 per cent over the past two years, spread across our underwriting, settlement, customer service, data analytics and technology teams.

Impairment charges increased from $4.1 million in FY16 (11bps) to $12.6 million in FY17 (22bps), principally due to increasing impairment provisions which increased to $31 million in FY17 from $27 million in FY16.

Total assets of $7.5 billion is the highest level in the company’s history. Net equity increased to $480 million in line with the 100 per cent recapitalisation of profits which resulted in an ROE of 17 per cent.

Liberty’s capital adequacy ratio of 15.5 per cent, approaches the top end of similarly investment grade rated, deposit taking financial institutions.

Mr Riedel said debt capital markets remain supportive of Liberty, which continues to have an unblemished track record after raising more than $20 billion in domestic and international capital markets since its inception in 1997.

“Liberty successfully priced seven asset backed and senior unsecured note issues during FY17. The aggregate value of $3.1 billion issued reflects investors’ confidence in Liberty, the performance of its securitisation program and its investment grade rating,” Mr Riedel said.

Mr Boyle said the investments made this year would continue to create business and customer value in the year ahead.

“Innovation is vital to maintain market leadership and we’re proud of our heritage of laterally transforming ideas into solutions. Our approach and commitment to innovation is also reflected in our sponsorship of Stone & Chalk’s new Melbourne office and our working relationship with Australian-leading, Melbourne Business School Centre for Data Analytics,” Mr Boyle said.

Income Statement ($m) 2017 2016
Finance income 424.0 316.8
Finance expense (266.2) (181.4)
Net finance income 157.8 135.4
Impairment charges (12.6) (4.1)
Personnel expenses (42.3) (37.6)
Operating expenses (26.6) (20.0)
Total expenses (81.5) (61.7)
Profit before tax 76.3 73.7
Income Statement ($m) 2017 2016
Finance income 424.0 316.8
Finance expense (266.2) (181.4)
Net finance income 157.8 135.4
Impairment charges (12.6) (4.1)
Personnel expenses (42.3) (37.6)
Operating expenses (26.6) (20.0)
Total expenses (81.5) (61.7)
Profit before tax 76.3 73.7
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