Our trading update for Q1FY23 is ready.
• Loan portfolio increased to $1.44 billion at 30 June 2022, 90% above PCP and 11% above prior quarter
• Strong quarterly loan originations of $289 million, up 34% on PCP
• Loan yields successfully increased across each lending vertical, as Plenti prioritised loan and business profitability over loan origination volumes
• $437 million automotive loan asset-backed securities (ABS) transaction completed in June
• Exceptional credit performance maintained and low 90+ day arrears of 31 basis points at 30 June 2022
• Revenue of $30.5 million and continued positive Cash NPAT in the quarter
Loan portfolio ($m)
Commenting on the quarter , Daniel Foggo, Plenti’s Chief Executive Officer, said:
“Plenti has delivered yet another strong quarter, driving substantial loan portfolio growth , further diversifying funding, and continuing to deliver Cash NPAT profitability.
“The strength of our business model has allowed us to increase loan yields to offset changes to funding costs to deliver another quarter of positive Cash NPAT.
“Plenti continues to deliver technology and customer experiences to differentiate our offerings and achieve our mission of building Australia’s best lender. ”
Loan portfolio growth
|Loan portfolio ($m)||30 June 21||30 June 22||Growth|
Plenti’s loan portfolio, which is a key driver of revenue, increased to $1.44 billion at 30 June 2022, up 90% from 30 June 2021 ($757 million) and up 11 % from 31 March 2022 ($1.3 billion ).
Total loan originations were $289 million, up 34% on the prior comparable period (PCP ). Total loan originations were 10% lower than the prior quarter as, consistent with statements made in its FY22 results presentation, Plenti prioritised increasing yields on new loan originations and business profitability over absolute loan origination volumes. Automotive loan originations increased 42% on PCP but were lower than the prior quarter as Plenti was an early market mover in increasing its borrower rates to help offset higher funding costs on new loan originations. Renewable energy loan originations increased 15% on PCP and were broadly flat on prior quarter, while personal lending increased 27% on PCP, and was up 9% on prior quarter.
Loan originations were supported by the deployment of several significant technology and operational improvement projects, driving continued improvements to Plenti’s market-leading customer experiences.
Exceptional and stable credit performance
Plenti has maintained its exceptional and stable credit performance, underpinned by its proprietary credit decisioning technology and supported by data it has derived from funding over 125,000 loans since it commenced lending in 2014.
Annualised net losses for the quarter were low at 57 basis points, reflecting the prime nature of Plenti’s borrowers across each of its three loan verticals. 90+ day arrears were 31 basis points at the end of the quarter, supporting an expectation for Plenti’s strong credit performance to continue over coming months.
The weighted average Equifax credit score across the loan portfolio remained at a record 837 at the end of the quarter.
Loan portfolio funding and margin improvement
Plenti completed a $437 million automotive ABS transaction in June, which increased its total ABS issuance over the last year to over $1 billion, and freed capacity in each of Plenti’s two automotive warehouse facilities.
Plenti has previously noted that, like other lenders, it has experienced increases in funding costs on new loan originations, principally this calendar year. While margins were impacted for several months as the market adjusted, Plenti has now increased its borrower rates to largely offset these higher funding costs. The chart below shows Plenti’s weighted average net interest margin on new loan originations for the last three quarters.1
New loan net interest margin (%)