Below is a recent (2 Feb 2023) summary from Macquarie Group who...

Below is a recent (2 Feb 2023) summary from Macquarie Group who have been AFG's broker for past capital raisings. So they must have a pretty good understanding of AFG's operations:

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
0	Macquarie	02/02/2023	3	Neutral	$1.81	9.04%
1	COMMENTARYActivity moderated for Australian Finance Group in the Dec quarter, Macquarie notes, with lodgements down -18.4% year on year. Home loan lodgements were down -51%.Competition in the prime segment, supported by bank deposit franchises, drove a shift in share towards banks, the broker highlights.Macquarie has not changed its forecasts, suggesting confidence in earnings should increase as cash rates and housing outlook stabilises.Neutral and $1.81 target retained.FORECASTMacquarie forecasts a full year FY23 dividend of 14.40 cents and EPS of 18.00 cents.Macquarie forecasts a full year FY24 dividend of 15.70 cents and EPS of 20.30 cents.

I think their current half year will take a significant hit compared with last year due to the reduction in loan approvals (confirmed in their December Quarter Index Report press release of 1 Feb) so share price will probably drop back. However, reporting brokers seem to have confidence in the store of trailing interest that AFG has built up over decades, to keep dividends reasonably healthy. I also believe that when the backlog of fixed interest loans have to be renegotiated over the next 6 months. AFG will see a healthy pickup in establishment fees. Their growth in commercial lending also looks positive, provided their risk management remains under control.

So I think Macquarie's forecast of dividends will probably be OK, and possibly conservative based on their relationship with AFG. Once the real estate market gets back to some normality - say 12 to 18 months, we should see a return to steady growth in profits and dividends.

If you look back over their Return on Equity since listing in 2014, averaging over 25%pa (as per Morningstar), I think they are one of the most under-rated companies on the ASX.

Cheers Westwind