Australian Finance Group reported a 39% rise in full-year net profit to $49 million for FY26, driven by a diversified earnings base and strong performance across its distribution and manufacturing segments.
Group EBITDA increased 32% year-over-year to $74.4 million, while underlying return on equity improved to 23%, up four percentage points from FY25. The cost-to-income ratio declined to 55%, and operating cash flow grew 42% to $51 million, with a 94% cash conversion rate.
The company's diversified earnings structure now accounts for approximately 78% of total profit, compared to a reliance on residential upfront commissions in prior years. Only 10% of earnings remain directly exposed to short-term residential lending volumes, according to management.
In the distribution segment, gross profit rose 2% to $115 million, contributing 68% of group EBITDA with an underlying ROE of 40%. Residential settlements totaled $75 billion, up 18%, while asset finance settlements increased 19% to $4.3 billion. Gross profit per broker climbed 12% to $43,000, supported by an 8% rise in residential upfront commissions to $35 million.
The trail book expanded to $232 billion, marking 22 consecutive years of growth, with a net asset value of $84 million. Broker services subscription income grew 13% to $24 million, now representing 23% of distribution gross profit. The broker channel's market share in new residential lending reached 81%, up from 50% in FY16.
AFG Securities, the company's manufacturing arm, reported a 107% surge in EBITDA to $33 million and a 52% increase in gross profit to $45 million. The cost-to-income ratio improved by 14 percentage points to 40%, while the closing loan book grew 30% to $7.1 billion, achieving a record 5.3% market share of AFG residential settlements. Net interest margin expanded by 9 basis points to 125 basis points, exceeding the through-the-cycle target of 120 basis points.
Term issuances hit a record $2.2 billion during FY26, with 67% of the book funded on improved terms. Credit quality remained strong, with lifetime losses below 1 basis point on $19 billion settled since 2007 and arrears at 1.7% as of June 2026.
Capital allocation totaled $51 million, with $21 million directed toward growth investments—$8 million to AFG Securities, $6 million to technology, and $7 million to broker investments. Shareholders received $30 million in capital returns, including a final dividend of 4.8 cents per share, bringing the full-year payout to 9.5 cents per share, a 4% increase. The company also executed a $15 million share buyback program, with $3 million in shares repurchased to date.
Looking ahead, AFG expects investments made in FY26 to deliver approximately $13 million in annualized EBITDA uplift entering FY27, with $10 million attributed to AFG Securities, $2 million to technology, and less than $1 million to broker investments. Near-term market activity softened after mid-May 2026, with residential lodgements declining 16% in early post-budget trading.
