H1FY23 update: Plenti delivers profitable growth in 1H23

Plenti Group Limited (Plenti) provides its results for the six months ended 30 September 2022 (1H23).

Financial highlights

• 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
  

Operational highlights

• 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
  

Significant milestones

• 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 ambitions

• 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”.

Financial performance

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 maintained its strong and stable credit performance, with annualised net losses for the half-year of only 63 basis points, reflecting the prime nature of Plenti’s borrowers across each of its three loan verticals.

Plenti generated Cash NPAT of $1.4 million in H1 FY23, a $3.6 million improvement on PCP and consistent with the outlook provided in May 2022. All technology development investments in the period were expensed, consistent with Plenti’s accounting policies.

Loan portfolio and loan originations

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.

Funding

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:

2H23 objectives

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.}

Plenti has continued to experience solid demand in 2H23 across each of its loan verticals. This has supported the loan portfolio growing to reach over $1.6 billion at 15 November 2022.