Media Release: COG Financial Services delivers solid result for H1 FY24
Australia’s largest asset finance services business, COG Financial Services Limited (ASX:COG), has reported a robust result for the first half of 2024, despite the impact of rate rises on margins. And the group’s broker network played an integral role in the solid performance, with a comparable, 20% increase in net amount financed for H1 FY24.
Ryan Young, CEO of COG Broking and Aggregation, calls it a “strong result in a tricky market”. “Along with our broker partners, we’ve seen some pressure on margins, driven by interest rate rises. The commercial segment continues to perform well, while activity in consumer transactions has been more erratic month to month,” he says.
“We’re also seeing a flight to scale, driven either by superior economics or increased certainty. This is the case with both lenders, with the banks clawing back some market share from finance companies and with aggregators, as brokers seek certainty and the marginal benefits of scale. In a high-rate environment, every dollar and every percentage point is crucial.”
During the six months ended December 31, 2023, the group’s broker network helped boost COG’s aggregation volumes, which rose 20%, consisting of 7% organic growth with the balance coming from NFC & UFS Aggregation, which were acquired in August 2023. “This was underpinned by modest market growth and strong new member acquisition, with brokers seeking to partner with a specialist and looking for the certainty of a well-established player,” adds Young.
More broadly across COG, which includes Westlawn Finance and a Novated division, Net Amount Financed during the first half was $4.3 billion, an increase of 27% on the previous period. Assets under management grew 22% to $854.8 million compared with this time last year.
In addition, Platform Finance, COG’s Strategic Partnerships business, recorded a 7.7% increase in settlements. “We saw even greater participation from existing partners and the addition of some new partners, who have recognised the value of using a specialist for their asset finance and personal loan needs,” says Damian Mantini, Platform Finance’s Head of Strategic Partnerships.
According to Young, COG’s in-house support and processing service for aggregation members, COG Broker Services, was another “key driver” of the robust H1 performance. “The fact that as many different firms used it over the six month period as occurred during the whole of FY23 vindicates our decision to offer it. We attribute this to two main factors: brokers using the service for holiday relief and overflow, and the fact it gives them a low-investment avenue to offer products that they’re not skilled at or accredited for, such as consumer lending.
Young adds, “We are committed to helping our members and partners, which is why we have focused on providing additional options to help them add more value to their clients or improve their cross-sell. Whether that is by using our Broker Services department to enhance their own offering or using COG CarSelect to assist with vehicle sourcing and removing dealerships from the finance equation.”
COG CarSelect, the group’s car buying business, saw originations via COG’s broker network increase by 67%. “Brokers have embraced our car buying business since we brought it fully in-house as COG CarSelect. Indeed, originations have spiked as brokers seek additional avenues to support their clients,” Young says.
Commenting on COG Broking and Aggregation’s outlook, Young says, “We anticipate the second half will remain solid and hope to see some support from a gradual reduction in interest rates. The overall picture for our market segment is one of continued solid progress, but where participants are having to work harder and smarter to make it happen.”