Plenti Group Limited (Plenti) provides its results for the six months ended 30 September 2022 (1H23).
- Loan portfolio grew to $1.55 billion, 69% above PCP and 19% above prior half
- Half-year loan originations of $558 million, 18% above PCP, despite material borrower rate increases
- Record revenue of $63.8 million, 71% above PCP and 24% above prior half
- Exceptional credit performance, with annualised net credit losses of 63 basis points
- $437 million automotive loan asset-backed securities (ABS) transaction completed in June
- Warehouse loan funding capacity increased to provide ~$340 million of headroom
- Cash NPAT of $1.4 million, a $3.6 million improvement on PCP
- Increased volume of loans funded by retail investors via innovative Plenti Lending Platform, which provides low cost and capital efficient funding
- Continued investment in extending technology advantages, including updated investor mobile app
- Reached $3 billion in total loans funded since inception
- Reached $1 billion in total loans funded by investors via Plenti Lending Platform since inception
- Sharpened focus on driving profitability both short and medium-term
- FY23 ambitions include reaching closing loan portfolio of ~$1.75 billion, achieving a cost-to-income ratio <35%and driving robust half-on-half Cash NPAT growth
- Medium-term ambition to realise $25+ million in cost benefits as loan portfolio doubles from $1.5 billion to $3.0 billion
Commenting on the half-year result, Daniel Foggo, Plenti’s Chief Executive Officer, said:
“Not all lending businesses are the same - these results demonstrate Plenti’s clear competitive strengths.
“In line with our focus on protecting margins, we have successfully increased yields on new lending to offset higher funding costs, helping to drive a positive Cash NPAT result for the half-year.
“We continue to invest in extending our technology-led customer experience and efficiency advantages as we work towards achieving our mission of building Australia’s best lender”.
Total revenue was $63.8 million, up 71% on the prior comparable period (PCP), driven by loan portfolio growth and higher rates being passed on to borrowers over the course of 2022.
Plenti’s diversified loan portfolio increased to $1.55 billion at 30 September 2022, up 69% from 30 September 2021 ($0.92 billion) and up 19% from 31 March 2022 ($1.3 billion). Strong growth was achieved in the loan book of each vertical over PCP. Automotive loans represented 58% of the loan portfolio, up from 37% on 30 September 2021.
Total loan originations were $558 million, up 18% on PCP. Increasing yields on new loan originations during the period was prioritised over absolute loan origination volumes, consistent with statements made in Plenti’s FY22 results presentation.
Plenti benefits from maintaining diversified, resilient and low-cost sources of loan funding.
Warehouse facility headroom was ~$340 million against the period-end loan portfolio, taking into account post-period capacity increases.
Plenti completed a $437 million automotive loan asset-backed securities ABS transaction in June, bringing its total ABS issuance since August 2021 to over $1 billion.
During the half Plenti renewed its focus on its unique retail investment platform, the Plenti Lending Platform. This has attracted over 26,000 investors and funded over $1 billion in loans, provides meaningful funding cost benefits and is capital efficient.
Strategy and objectives
Plenti’s strategy is to establish market leadership positions in each of its segments, extend its product and technology advantage and optimise its funding.
During 2H23, Plenti will remain focused on maximising the yield it achieves on new loan originations, while driving further operational efficiencies and Cash NPAT results. Plenti has set the following financial objectives for 2H23:
|Growth||Reach loan portfolio of ~$1.75 billion at 31 March 2023 (~35% annual growth)|
|Profitibility||Drive robust Cash NPAT growth|
|Efficiecy||Achieve cost-to-income target of <35%|
As set out in its quarterly trading update on 26 October, Plenti’s medium-term ambition is to achieve cost efficiencies of at least $25 million when its loan portfolio doubles to reach $3 billion. The chart below shows Plenti’s actual cost base1 for the 12 months prior to it achieving a $1.5 billion loan portfolio, and its estimated cost base for the 12 months prior to reaching a loan portfolio of $3 billion.
1Cost base includes Sales & marketing, Product development and General & administrative expense as presented in Plenti’s Statement of Profit or Loss on a statutory basis. This includes the value of share-based payments which are not included in the calculation of Cash NPAT.