Australia’s largest asset finance broking and aggregation group has announced it grew its profits by 140% in the first six months of this financial year.
In its 1H20 report, COG Financial Services Limited shared it had achieved a Net Profit After Tax and before Amoritisation (NPATA) of $10.1m, up significantly from the $4.2m charted in 1H19.
According to COG CEO Andrew Bennett, the “terrific result” makes clear the group is a “great business in normal times and an even better one in times of stress”. As he sees it, the trading performance for the half is attributable to several key factors.
“In the Finance Broking all & Aggregation (FB&A) segment, COG is exposed to government’s stimulus packages, primarily around infrastructure spending but also the wave of cheap money (debt) available to consumers and SMEs. This has seen volumes hold steady and increase the brokerage margins off the back of very low interest rates,” he explained.
Within the FB&A arm of the business, the net amount financed over the six months was down 11% on average, but the brokerage margins were higher resulting in a NPATA of $5.9m, up 85% on the prior comparative period’s $3.2m.
“In the Lending segment, performance has been strong – solid originations and low losses,” Bennett added.
Of the 650 accounts granted COVID-19 hardship relief in FY20, all but 10 have resumed normal conditions, allowing around $0.9m of provision for expected loss to be reversed; this contributed to the division of the business achieving an NPATA of $4.5m, up 125% on the prior comparative period’s $2.0m.
Bennett also emphasised that COG is relatively new, being just five years old, and believes its recent success is partially due to the maturing of the business.
“Over five years, COG has become approximately 20% of the intermediated asset finance broking market, and as such is the biggest player,” he said.
“We intend to continue acquiring more brokers, and to invest further in our own proprietary software systems so that our position as the market leader becomes unassailable.
“The benefit of this strategy is that it allows COG to grow strongly in good times, but given its place in the supply chain for major infrastructure projects, it has a natural hedge such that in times of stress it actually performs better than in normal times.”