Australian Finance : AFG 2021 AGM Address to Shareholders

Market Release

only26 November 2021

Market Announcements Office ASX Limited

Exchange Centre

20 Bridge Street

useSYDNEY NSW 2000

Dear Sir/Madam

2021 AGM Address to Shareholders

personalThe Company will address shareholders today at its Annual General Meeting to be held at 9:00am Western St ndard Time at Level 4, 100 Havelock Street, West Perth WA.

Attached is a copy of the joint Chair and CEO address and accompanying presentation.

The live feed of the AGM can be accessed at: https://webcast.openbriefing.com/8049/.

Authorised for disclosure by:

Lisa Bevan

Company Secretary

For

CONTACT DETAILS
Alison Clarke, AFG Head of Corporate Communications	Mob [phone]
David Bailey, CEO	Tel [phone]

Annual General Meeting

26 November 2021

Chair

onlyGood morning, everyone.

On behalf of the board and management of AFG I would like to welcome you to the 2021 Australian Finance Group Limited Annual General Meeting.

My name is Tony Gill, and I am the Chair of AFG.

O ce again, due to COVID-19 travel restrictions, I am unfortunately unable to attend in person today and am joining via teleconference.

I will keep my address brief and extend my thanks to AFG Non-Executive Director Jane Muirsmith, who will take responsibility for the formal business of today's meeting following the Chair and CEO address.

useAs a courtesy to all shareholders and guests present, please turn off or silence your mobile phone.

The 2021 financial year saw another outstanding result for AFG. Our story is one of growth. For the full year AFG reported a net profit after tax of $51.3 million, an increase of 35% on FY20.

Driven by record demand for the services of our network of brokers, our combined residential and commercial loan book has grown 8% over the year and is now sitting at $175.7 billion.

As the country learns to 'live with COVID' and continues to gradually open up, there will no doubt be challenges but the broader economy should return to a more normal footing, and we expect the momentum in our business to continue. As we move into the new year volumes remain strong.

personalAFG is a capital light business, with a strong and liquid $282 million balance sheet.

Combined with the cash flow capabilities of our trail book, the company is delivering positive returns for our shareholders nd delivered full year dividends up 32% to 13.3 cents per share. This represented a 5% fully franked yield.

In 2021 AFG made a strategic investment in neobank Volt. After only 4 months, a white label product and personal finance manager app were developed and released to a pilot group of AFG brokers. I look forward to the successes that will come from this collaboration. It will further position AFG at the technological forefront of the mortgage market to serve our brokers and customers.

T day I would like to formally introduce you to our newest board member, Greg Medcraft.

Having spent seven years as Chairman of our industry regulator, ASIC, and many years stewarding the Australian Securitisation Forum, Greg is a highly respected professional. His extensive experience across the financial sector will be invaluable to AFG.

Greg joined the AFG board as a non-executive director in September, and I look forward to his appointment being ratified at today's meeting.

And finally, I would like to extend my appreciation to those of you able to attend our meeting in person or online today, and for all shareholders who have taken the time to participate in today's meeting through the proxy voting process.

I would also like to thank AFG staff, our brokers, and my fellow board members for their support during what has been another extraordinary year.

ForI will now hand over to our CEO, David Bailey.

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26 November 2021

CEO

onlyThank you, Tony.

I would also like to extend my thanks to you all for your participation in today's meeting.

O ce again, I am very pleased to be reporting another highly successful year for AFG. Our brokers have experienced record demand for their services, and they have risen to the challenge.

With more than 3,050 brokers in our network, our full year results demonstrated strong growth across the board.

Residential settlements were $43.6 billion, an increase of 28% on the prior year. AFG Home Loans settled $3.4 billion, an increase of 10% and AFG Securities settlements in the second half were up 80% on the same period last year. Commercial settlements were $2.3 billion and our asset finance business settlements were up 14% for the year to $611 million.

useFor our commercial division, FY2021 has been a tale of two halves. The commercial lending market was the hardest hit by COVID restrictions in the first half of the year, however activity has since increased, and commercial settlements were up 23% in the second half. Our investment in ThinkTank continues to deliver value, with white label settlements of $130 million. The return of activity in the commercial market will also benefit our investment in ThinkTank.

We issued three RMBS transactions for the year and have made strategic investments to grow our business. T rning to our current trading, I will start with our residential broking division.

More than $24 billion in home loan finance was lodged for the first three months of the new financial year. That is almost $6 billion more than the same period last year, a 33% increase.

personalResidential lodgements in October were up 36% on the same time last year to a record $9.2 billion. AFG Home Loans lodgements were up 57% and AFG Securities lodgements were 148% higher than October 2020.

Positive growth in residential volumes were recorded in all states, despite various lockdowns and restrictions.

Our purposeful slowing of AFG Securities activity in response to COVID-19 uncertainty are well documented. We did reactivate lending in the second half, and as a result our Securities' lending was up strongly on the corresponding period last year.

Maintaining that trend of growth, AFG Securities lodgements increased to a record $388 million in October 2021.

Fuelled by a once in a generation funding free kick in the form of the Term Funding Facility, ADIs aggressively sought market hare with highly competitive fixed rate offers. Like other non-bank financial institutions AFG Securities felt the impact. The addressable market for AFG Securities is now expected to increase as fixed rate products ultimately become less attractive

to borrowers.

As indicated at the time of our FY21 results, we commenced looking to increase the focus on our higher margin AFG S curities products this financial year. This has seen lodgements of AFG Securities' higher margin products increase to $103 million for the month of October, which compares exceptionally well to the $10 million in October 2020.

The increase has been achieved by considered credit expansion as well as expanding the product offering and importantly will support the long-term net interest margin of AFG Securities as these loans begin to settle.

We see our AFG Securities loan book as being at the commencement of its growth phase. Notwithstanding higher run-offForates industry wide, our growth is well above system.

We have recently executed a 3rd warehouse with a 2-year tenure and our largest warehouse has been extended to December 2022, providing certainty of funding.

We are very pleased with the momentum in this part of our business.

Whilst continuing to invest in and grow our core, our diversification strategy has been further expanded. As Tony mentioned, in May AFG invested in neobank Volt to provide AFG with further white label funding opportunities and access to market- leading Banking as a Service tools. With the product already underway, the BaaS tools will form an important part of ensuring our brokers and their customers have the best opportunity to participate in the benefits of Open Banking as it builds across the market.

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Annual General Meeting

26 November 2021

The 2021 financial year also saw AFG begin the reporting of ESG metrics.

Recognising the important role, we as a company play in our community, with our brokers, customers, and our staff, I am onlyvery proud this year to be able to demonstrate the progress we have made around ESG.

This year we undertook the first measure of the company's carbon footprint. From this starting point our challenge is now to develop consistent, accountable, and transparent internal practices to reduce avoidable greenhouse gas emissions where possible, and to examine opportunities to offset unavoidable greenhouse gas emissions to address our impact on the e vironment.

Our initiatives around furthering the support of women in broking are gaining momentum and we remain focused on ensuring ur lending panel provides access to finance for those whose needs may not be met by the traditional banking sector.

As one of the country's largest networks of mortgage brokers we see firsthand the importance of a place to call home. In June this year we were delighted to announce a landmark sponsorship agreement. AFG is now Principal Partner of Foyer Foundation. Foyers operate nationally and are integrated learning and accommodation settings that provide young useAustralians experiencing disadvantage with a pathway to education, training and employment, founded on access to stable

and secure housing.

One aspect of our support is a quarterly grant program called the AFG Independence Fund. Having often overcome family, housing and financial challenges, young people living at Foyers are not always able to afford the tools and resources required to enter the workforce or complete their studies. The AFG Independence Fund provides direct financial support for their education, employment, and wellbeing.

O r commitment to ESG remains strong and I look forward to providing the market with important updates as to our progress.

Looking ahead, most are predicting interest rates will begin to rise from their historic lows. A rising interest rate environment personaldrives broker inquiry and mortgage brokers are the dominant channel for home loans in this country. 59% of Australian

mortgages are written through a broker.

With access to government-supported funding having ceased, the major lenders are once again raising interest rates, leveling the playing field for competition from the non-major lenders, including AFG Securities. The role of a mortgage broker will only become more important to consumers as they look to navigate the changing lending environment.

In addition, with borders reopening, expats, working tourists and overseas students are expected to return to the country and there will likely be a lift in immigration. These factors will support the strength of the residential mortgage market.

AFG's business model has demonstrated resilience through the cycle, and we will look to continue to expand opportunities for distribution and high margin securitisation lending through investments.

Finally, AFG remains well positioned to continue to support our customers, our broker network and our lending partners. Our diversified income streams will continue to drive shareholder value.

I xtend my thanks to AFG staff and our brokers and thank you for your continued support of the company. I look forward to another successful year for AFG.

I would now like to hand over to Jane Muirsmith to conduct the formal business of the meeting. For

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2021

Annual General Meeting