Commenting on the quarter, Daniel Foggo, Plenti’s Chief Executive Officer, said:
“We achieved strong operational performance across all areas of our business in our third quarter, which was especially pleasing given the focus and resources applied to the establishment and then implementation of our strategic partnership with NAB.”
“We enter 2024 excited about our ability to drive strong operational results in our existing activities, whilst also delivering on exciting new initiatives, most notably the launch of the ‘NAB powered by Plenti’ car loan.”
Loan portfolio growth
|Loan portfolio ($m)
|31 Dec 22
|31 Dec 23
Plenti’s loan portfolio, which is a key driver of revenue, increased to $2.07 billion at 31 December 2023, a 24% increase from 31 December 2022 and a 4% increase from 30 September 2023. The loan portfolio remains diversified across Plenti’s three lending verticals, with the contribution from renewable energy continuing to increase over the period.
Loan originations and margins
Loan originations for the quarter totalled $291 million, 2% below the prior comparable period (PCP) and in line with loan originations in the prior quarter, as Plenti maintained its focus on optimising across loan origination volumes, loan net interest margins and portfolio credit characteristics.
Automotive loan originations were $153 million, up 7% on PCP, but down 1% from the prior quarter. Renewable energy loan originations reached a record of $42 million, up 25% on PCP and 5% above the prior quarter, supported by the continued market adoption of Plenti’s unique GreenConnect platform. Personal loan originations were $96 million, down 21% on PCP and 2% on the prior quarter, reflecting some tightening of Plenti’s credit appetite through the year as the business maintained a focus on delivering stable credit outcomes.
Product level net interest margins on new loan originations saw a positive trend as the quarter progressed, supported by the reduction in funding costs in line with medium term market interest rates.
Strategic partnership with NAB
Plenti announced in November 2023 that it entered into a strategic partnership with NAB under which Plenti will provide “NAB powered by Plenti” and Plenti own-branded finance solutions to NAB’s large personal banking customer base. Plenti and NAB concurrently entered an equity investment agreement, which provides for NAB to acquire or subscribe for up to 15% of Plenti’s share capital, based on the achievement of certain product milestones.
The first product under the strategic partnership, a “NAB powered by Plenti” car and EV loan, remains on track to launch to customers in the second quarter of calendar 2024. Strong progress has been made in the development of this product since the announcement of the strategic partnership, including technology integration workstreams and operational processes required to deliver a leading customer experience.
90+ day arrears were 46 basis points at the end of the quarter, stable on the end of the prior quarter result of 45 basis points. Early-stage arrears continue to be stable, reflecting resilience in broader consumer credit, and assisted by the continual refinement of Plenti’s credit risk appetite and settings.
Annualised net losses for the quarter were 123 basis points, broadly consistent with the 107 basis points underlying result in 2Q24 and 117 basis points in 1Q24.
The loan portfolio weighted average Equifax credit score remained high at 833 at the end of the quarter, versus 832 at the end of the prior quarter.
Plenti completed extensions of its two automotive warehouse facilities in the quarter. One was restructured using an innovative rated structure to achieve a funding cost benefit, offsetting a funding cost increase from the second warehouse facility, which had been established in 2021 at a low point in market funding costs.
Plenti also launched a $300 million personal and renewable energy loan ABS transaction in late January 2024, which has seen strong investor demand to date and is expected to be priced over coming days. The transaction may be upsized to $375 million.
Plenti is on track to achieve the FY24 priorities and objectives set out below:
|- Drive growth in loan originations and loan portfolio- Grow revenue to over $200 million
|- Deliver full year Cash NPAT growth, skewed towards 2H24
|- Reduce cost-to-income ratio to <30%- Remain on target to deliver $25m in efficiencies as loan portfolio scales towards $3 billion