Highlighting that Australian Finance Group does not compete against banks for fixed rate loan rates, Macquarie notes the company may benefit following last week’s rate rise with activity levels historically increasing during rate rising cycles as consumers look to refinance.
The company noted a preference for fixed rate over variable lodgments in the March quarter, with fixed rate lodgments declining -47.5% over the period as variable lodgments increased 8.3%. Upside risk for both book growth and margins in the current environment.
The Outperform rating and target price of $2.94 are retained.
Target price is $2.94.Current Price is $1.84. Difference: $1.10 – (brackets indicate current price is over target). If AFG meets the Macquarie target it will return approximately 59% (excluding dividends, fees and charges – negative figures indicate an expected loss).