‘Customers are very aware of the cost of finance and very open to conversations around improving that… brokers do a really good job at engaging customers around that reality’
Thank the stars for diversification, Liberty Financial Services must be saying today.
The ASX-listed non-bank lender interim results for the six months ending 31 December 2025 were a mixed bag in the residential space.
While residential originations surged nearly 9% to $1.85 billion on a year-on-year basis, its residential loan portfolio closed 4% lower at $7.6 billion.
This was attributed to a discharge rate that Liberty chief executive James Boyle (pictured) diplomatically said was “beyond our preferences”.
In a chat with MPA, Boyle said the rate of discharge on Liberty’s residential mortgage book has been steadily increasing over an extended period, but “certainly we would like to see it remediate”.
It is a result of increasingly tight competition in both the prime and near-prime segments of the residential mortgage market. Brokers, meanwhile, are doing what they should be doing – helping borrowers find the right deal for them amid a flurry of refinancing.
“Customers are very aware of the cost of finance and very open to conversations around improving that,” said Boyle. “And of course, brokers do a really good job at engaging customers around that reality. They're the fundamental drivers of customers moving between lenders.”
This competitive lending environment is making customer-retention initiatives all the more important (even if these customer-retention initiatives cause a three-basis-point margin hit, as was the case for Liberty).
“It's about building stronger relationships with customers, having more frequent conversations with them, and seeing if we can work with them at times of need,” said Boyle. “We really believe you can't get close enough to or work hard enough for your customers.”
But Boyle is not overly enamoured with one-time promotions or short-term discount pricing. These can offer near-term benefits, “but in the medium term can be quite costly (and don’t allow a) balanced service to both brokers and customers”.
“We tend to be very consistent and measured and focused on competitive services at a competitive price,” he added.
That strategy has allowed Liberty to retain one of the best net interest margins in the game at 2.47%, significantly above the sub-2% margins typical of traditional lenders.
Boyle attributed this to Liberty’s diversification strategy.
Liberty supercharges SME offering with Moula acquisition
“We're a more diversified non-bank than any other,” he said. “That means we operate in higher yield areas as well as highly competitive lower yield areas. And so getting that mix right is a good part of the challenge to maintaining positive margins.”
Liberty’s diversification into SME finance, for instance, was something of a saving grace this reporting period.
The group’s ‘secured’ portfolio, which combines SME finance, SMSF lending and auto finance, surged by 4.7% to $6.1 billion. Originations soared over 15%. This managed to offset Liberty’s reduced residential portfolio to keep the group-wide portfolio stable at around $14.8 billion.
In order to bolster SME volumes, Liberty has made an effort to make the SME lending process easier for brokers.
“For a long time we've seen a really vibrant mortgage broking community that's really, really experienced (in) delivering great solutions for consumers of home loans and related consumer products like motor loans. But taking that step into SME can be more complicated and a little bit overwhelming,” said Boyle.
Liberty’s 50% controlling stake acquisition of cashflow lender Moula, effective from 31 December 2025, is set to make Liberty’s SME proposition stronger.
The acquisition is “a win-win” that will provide “a broader solution set for small-business borrowers”, said Boyle.
Moula’s long-established cashflow lending products will work in tandem with Liberty’s secured lending offering. “There's a great sweet spot there to be able to provide a more fulsome solution set for even more small businesses regardless of their circumstances,” said Boyle.
