Liberty stays the course with continued profit growth

14 Nov 2019 | Share:
  • Before tax profit $94.1m (2018: $83.9m) (+12%)

  • Total assets of $12.7b (2018: $10.2b) (+24%)

  • Issued $4.7b in asset-backed and senior unsecured securities

  • Developed and introduced a small business lending product

Leading non-ADI lender, Liberty Financial Pty Ltd (Liberty) reported a 12 per cent increase in consolidated profit before tax to $94.1 million (vs $83.9 million) for the year ended 30 June 2019.

Continued growth in Liberty’s loan portfolio underpinned this strong result, with total assets reaching $12.7 billion (vs $10.2 billion). The portfolio is well balanced among residential, commercial, SMSF, motor and personal loans.

James Boyle, Chief Executive Officer, attributed the continued growth to Liberty’s highly differentiated service.

“We listen and respond to the needs of mortgage brokers and customers. From a customer experience perspective, the fall-out of the Banking Royal Commission significantly impacted the last financial year. By evolving quickly and helping our business partners and customers deal with those changes, we’ve been able to continue our momentum,” he said.

Mr Boyle said the market demanded innovation and competition more than ever before.

“We try to be nimble and evolve our products and services based on market developments and the feedback our customers provide. Recently, that lead us to expand our lending options for small businesses, as well as expanding our unsecured personal loans offer,” he said.

Peter Riedel, Chief Financial Officer, said the business fundamentals remained strong.

Total finance income grew by 30 per cent to $811.5 million (2018: $622.0 million), while total expenses grew by 29 per cent over the same period. Growth in financial assets and non-interest income has driven a corresponding increase in finance income.

While Liberty has continued to employ people across the business to support its growth, this will moderate as more customer self-service features gain traction.

Impairment charges for the year represented 21bps of average financial assets, compared to 24bps in FY18. This reduction reflects the continued evolution to a lower risk profile financial asset portfolio.

The increase in total assets to $12.7 billion (2018: $10.2 billion) reflects the growth in new residential, commercial and motor vehicle loans and a stable average life of loan. Net equity increased to $811 million in line with the continued approach of recapitalising 100 per cent of profits.

The business achieved a ROE of 13 per cent and has a risk-adjusted capital ratio of 15.3 per cent which is supportive of its Standard & Poor’s investment-grade rating of BBB- (stable outlook). S&P has just re-affirmed Liberty’s rating.

“Although geopolitical issues affected global capital markets during the year, debt capital market investors have continued to strongly support Liberty. Concerns over Brexit and the impact of regulations resulted in subdued issuance in the third quarter of the financial year. These pressures subsided in the fourth quarter, enabling a renewed focus on issuance.

“Throughout the year, Liberty successfully priced eight asset-backed and senior unsecured note issues raising $4.7 billion of total funding,” Mr Riedel said.

Mr Boyle said the business is prepared for the challenges and opportunities that the coming year would bring.

“Understanding the needs and circumstances of customers continues to be our focus. Financial wellbeing has always been a core philosophy of our business and we have further illustrated this by joining the Financial Inclusion Action Plan program. This strongly aligns with our purpose of helping more people get financial,” Mr Boyle said.