CEO David Bailey discusses acquisition targets and white labels following first-half results
Australian Finance Group (AFG)’s interim results went down well on the ASX on Wednesday, with shares pumping over 7% at the time of writing.
As covered earlier by MPA, AFG brokers increased residential settlements by 19%, with asset finance settlements up 20%, on a year-on-year basis in the six months to 31 December.
Across the entire business, net profit after tax (NPAT) surged 46% year on year to $22.4 million.
Discussing the results with MPA, “we’re very comfortable” with how AFG is tracking against its targets, said chief executive David Bailey (pictured).
“Key parts of our business obviously are growing the distribution and then folding in other areas where we can generate earnings by providing products and services to our brokers that they embrace.”
These products and services include workflow platform BrokerEngine, which saw a 23% increase in subscribers to 4,100 in the latest reporting period. 800 of these subscribers came from outside of the AFG network.
Five brokerage investments and counting
One of the more notable developments at AFG has been its acquisitive appetite.
Since launching its Broker Investments platform in November 2024, AFG has acquired equity stakes in five brokerage businesses, including Melbourne-based Empower Wealth Group and TS Finance Broking, Perth’s Lifespan Mortgage Services, and Sydney-based brokerage Loan Path Finance.
Touching on these investments, early signs are “very positive”, Bailey told MPA.
To-date acquisitions are expected to add around $2 million to underlying earnings on an annualised basis, Bailey revealed.
These brokerages are having a “network effect” as they make further investments in loan books and other businesses, explained Bailey.
“The whole broker investment scheme is really about what we're seeing as a consolidation of the industry and creating succession pathways for brokers who are looking to exit the industry,” said Bailey. “So yes, early signs, but it's very positive.”
While AFG currently has five brokerage investments under its belt, it has bullish projections – by the end of 2029, the group is hoping to increase that number to 35.
Bullish, perhaps, but “we’re not afraid of that aspirational target”, said Bailey. “I don't think it's linear. We would expect within those 35, there'll be businesses that we've taken equity investments in who'll go out and buy their own businesses as well.”
In terms of acquisition targets, AFG is targeting businesses with growth opportunities with strong repeat business and concrete internal succession plans.
AFG has widened its pool of interest to brokerages outside of the existing AFG network.
“The program initially started with AFG brokers, but then we had received some reverse inquiries,” said Bailey. He believes there has been an increase in awareness of AFG’s investments program, with leads being generated by the group’s lending partners and a “very active” sales and partnership manager network.
“With the advancement of technology and the age profile, the demographic of the industry, there'll continue to be consolidation in the industry,” Bailey said. “We think good brokers are going to get busier and as they become busier, they want to grow their businesses; acquisition and merger is probably the best way they can do that.”
A white-label shift
Post-reporting period, it has been a busy start to the year, with residential lodgements up 23% in January on a year-on-year basis.
Touching on current market conditions, Bailey said: “There's still a large element of customers who, despite an interest rate rise, are comfortable in their financial position and are still aspirational and want to continue to grow in their own personal wealth journey.”
AFG is also reshaping the distribution of its white-label products via AFG Home Loans, which currently represents about 7% of residential volumes.
It is steadily moving its white-label funding mix away from external funding partners and into its higher-margin AFG Securities program.
AFG Securities now funds 44% of AFG‑branded home loans, compared with 39% in 2025 and less than 33% in 2025.
A recent $1.2 billion RMBS transaction has provided AFG Securities with plenty of ammunition for now, but is there more in the pipeline?
“As that business grows and the level of market share we're able to obtain from that part of the business (grows), we'll have a capital requirement. The RMBS market, whilst it's liquid, is the right avenue so we would be looking to come to market regularly, as we've told our investors,” said Bailey.
