Key Highlights

  • Australian Finance Group reported FY26 NPAT of $49 million, up 39% from FY25.
  • The Manufacturing Loan book expanded 30% to a record $7.1 billion, with net interest Margin reaching 125 basis points.
  • Distribution EBITDA increased to $71 million, while residential settlements rose 18% to $75 billion.
  • AFG declared a fully franked final Dividend of 4.8 cents per share, taking the FY26 dividend to 9.5 cents per share.

Australian Finance Group (ASX: AFG) ticked +0.65% higher to $1.54 AUD today on the back of 39% profit growth and a record lending book. The solid gain reflects growing confidence in the company's diversified Earnings model. The company reported a significant increase in FY26 profitability, with net profit after tax rising 39% to $49 million. Underlying NPATA increased 33% to $54 million, reflecting earnings growth across both the Distribution and Manufacturing segments.

The company said operating efficiency also improved during the year. Underlying Return on Equity increased to 23% from 19%, while the cost-to-income ratio declined to 55%.

AFG's earnings mix has also changed, with approximately 90% of earnings now supported by recurring or diversified income streams. This represents a broader earnings base than one primarily dependent on near-term residential lending volumes.

Distribution Segment Benefits From Network Expansion

AFG's Distribution Business remained the largest earnings contributor, with Distribution EBITDA reaching $71 million. Residential settlements increased 18% to $75 billion during FY26.

The company's broker network expanded to more than 4,300 brokers, serving more than 600,000 customers across over 80 lenders. AFG stated that its Brokers wrote approximately one in nine Australian mortgages during the year.

Broker Services income increased 13% to $24 million, marking more than eight consecutive years of growth. Asset and commercial finance settlements also increased 19% to $4.3 billion, supported by Fintelligence and broader Demand for diversified financing solutions.

Distribution generated a reported return on equity of 40%, reflecting the capital-light nature of the segment.

Manufacturing Loan Book Reaches Record Level

The Manufacturing segment continued to expand, with its loan book increasing 30% to a record $7.1 billion. Underlying return on equity for the business reached 30%.

AFG reported net interest margin of 125 basis points, supported by record term issuance of $2.2 billion, improved Warehouse Economics and additional funding sources. These factors provided greater visibility over funding costs while supporting the expansion of the lending platform.

The company's 32% Investment in Thinktank also contributed to earnings growth. Earnings from the investment increased by $3.6 million, while Thinktank's Assets Under Management reached $9.6 billion.

Cash Generation and Capital Management

AFG generated $51 million of Operating Cash Flow during FY26, representing a cash conversion rate of 94%. The company ended the year with $63 million in unrestricted cash.

Capital was allocated across business reinvestment, the Broker Investments program and Shareholder returns. During FY26, AFG purchased $3 million of shares under its ongoing on-market buy-back program, which has a total announced capacity of up to $15 million.

The board also declared a final FY26 dividend of 4.8 cents per share. The dividend is fully franked and takes the total FY26 dividend to 9.5 cents per share. The final dividend has a Record Date of 1 September 2026 and is scheduled for payment on 1 October 2026.

FY27 Outlook and Housing Market Conditions

AFG enters FY27 with a larger lending book and approximately 10% of earnings directly exposed to short-term residential volumes. The company also expects approximately $13 million of annualised EBITDA uplift from investments made during FY26.

Residential lodgements have softened since June as borrowers respond to changes in tax policy settings, interest-rate expectations and household cost pressures. AFG said this has resulted in more cautious decision-making, although underlying housing demand remains.

Refinancing, upgrader activity and customer retention are expected to remain relevant areas of activity. The company also expects its broker network to benefit from borrowers seeking assistance to compare lenders and navigate changing lending conditions.

Conclusion

AFG's FY26 results show a business with increasing contributions from lending, broker services and diversified income streams. NPAT rose 39%, while the Manufacturing loan book expanded 30% and Distribution EBITDA increased. The company also maintained cash generation and declared a higher annual dividend of 9.5 cents per share. At the same time, softer residential lodgements entering FY27 represent a near-term operating consideration, although the broader earnings mix provides AFG with exposure beyond the immediate housing cycle.