Australia's largest equipment finance aggregator platform faces rising arrears amid tougher lending backdrop
COG Financial Services Limited delivered a solid rise in profit for the year ended 30 June, even as bad debt provisions climbed across its lending book — a sign the mortgage and finance broking sector is not immune to the macroeconomic pressure squeezing borrowers.
Revenue and underlying profit both grew at a healthy clip over the year, driven largely by a standout performance in its salary packaging division. But the headline growth masked a more uneven picture underneath.
Broking & Aggregation – the segment covering COG's national network of independent aggregation platform members and equity-owned brokers – posted only modest revenue growth for the year, with earnings in the segment essentially flat.
That subdued result was offset by a much stronger performance in Salary Packaging, COG's novated leasing division, where revenue and earnings both climbed sharply. The division benefited from the acquisition of Easifleet in September 2025, and continuing demand driven by the fringe benefits tax (FBT) exemption for electric vehicles – a trend that has accelerated over multiple years.
Brokers navigate volatility, diversify offerings
Mark Rayson (pictured, right), head of COG Aggregation, said the year's results reflected the resilience of brokers through a period marked by economic and geopolitical uncertainty.
"There was a lot for businesses and consumers to contend with during the year, and we saw that reflected in confidence and activity," Rayson said. "The market softened through April and May before bouncing back strongly in June. What remained constant was the underlying need for finance. Businesses still need to replace vehicles, machinery and equipment. They can defer that investment for a period, but ultimately they need those assets to operate and grow."
Growth in broker numbers and settlement activity pointed to ongoing confidence in the channel, while diversification beyond traditional asset finance created new revenue opportunities during the year.
Damian Mantini (pictured, left), head of strategic partnerships at COG subsidiary Platform Finance, said brokers were rapidly broadening the finance solutions they offer clients, with cash flow and secured lending volumes surging 190% during the year.
"Brokers are having broader conversations with their customers and looking beyond traditional asset finance," Mantini said. "They're expanding their service range, giving them more ways to solve client problems and build long-term relationships."
COG's lending panel also expanded during the reporting period, with 10 new lenders added, taking the panel to 64 and giving brokers access to a broader range of funding options. "While the major banks remain a vital part of the market, brokers are increasingly using non-bank and specialist lenders to find tailored solutions," Mantini said. "Having that breadth gives brokers real flexibility when a client or transaction falls outside standard bank criteria."
The variety of deals funded during the year underscored the increasingly complex financing needs of COG brokers' clients, ranging from a $12.5 million facility restructure for a civil construction firm to a $1.5 million Lamborghini Revuelto transaction for a high-net-worth client.
"Construction and transport remain core pillars for us, but the asset mix is expanding dramatically," Rayson said. "That's precisely where specialist capability and a broad lending panel prove their value."
Bad debts rise
The results revealed a deterioration in credit quality across COG's lending book, with the overall expected credit loss (ECL) provision rising to 2.5% at 30 June 2026, up from 1.8% a year earlier – a shift the company attributes to elevated macroeconomic uncertainty.
The rise was most pronounced within the Lending segment, where the ECL provision on finance lease receivables climbed to 8.2% of the gross portfolio, up from 5.8% in 2025. Loans more than 90 days in arrears grew to $8.19 million from $4.81 million.
Andrew Bennett, COG's group chief executive, said the increase reflected the group's cautious approach to risk rather than a sudden deterioration in loan performance. "COG saw a small increase in the level of loan loss provisioning year on year as a result of continued prudence in our provisioning policy," he said.
The Lending segment's earnings contribution fell as a result, with reduced lending volumes at subsidiary Westlawn Finance Limited and a loan book in run-off at TL Commercial Finance also weighing on the division.
The pressure echoes broader conditions facing SME borrowers, with brokers across the country reporting that commercial and SME clients are navigating rising costs and tightening lender risk appetites.
Resilience despite the headwinds
Chairman Antony Robinson framed the year as one in which COG's underlying operations held steady despite broader market turbulence. "This past year has tested the listed market more broadly, and our share price has not been immune to those shifting winds," he said, adding that "the underlying business has been considerably calmer and more stable".
Bennett pointed to the group's continued acquisition strategy as a key driver of growth over the year, noting COG had invested across the business in technology and people, alongside acquiring full control of Easifleet and lifting its stakes in several existing subsidiaries.
Macroeconomic pressures and changing borrower preferences also reshaped vehicle finance during the year, with COG CarSelect, the group's car buying and procurement service, recording a 15% increase in vehicle settlements.
"Running costs are front of mind for borrowers, which is accelerating interest in low-emission vehicles," Rayson said. "Salary packaging is also helping drive demand, particularly for eligible EVs where the FBT exemption can make novated leasing more attractive."
