Pepper Money (PPM) investor relations material

Executive summary

• Achieved record originations of $6.3 billion in H1 2026, up 40% year-over-year, with mortgage originations up 63% to $4.5 billion and asset finance originations up 2% to $1.7 billion.

• Assets under management (AUM) reached $24.0 billion, up 20% year-over-year, with lending AUM at $18.5 billion and servicing AUM at $5.5 billion.

• Pro-forma NPAT rose 15% year-over-year to $53.9 million; statutory NPAT was $50.4 million, up 7%.

• Fully franked interim dividend of 7.2 cents per share declared, up 12% year-over-year, with a 60% payout ratio and 9.5% annualised yield.

• The Board rejected a non-binding acquisition proposal from Challenger Limited during the period.

Financial highlights

• Net interest income rose 17% year-over-year to $184.5 million; total operating income grew 10% to $204.0 million.

• Net interest margin (NIM) improved 12 bps year-over-year to 2.10%; mortgages NIM at 1.64%, asset finance NIM at 2.87%.

• Cost-to-income ratio improved to 49.4%, or 48% excluding non-recurring costs, a 2 percentage point improvement year-over-year.

• Loan loss expense increased 19% year-over-year to $48.7 million, reflecting portfolio growth and updated macroeconomic assumptions.

• Total loan loss provisions rose, with coverage ratio stable at 0.79% of lending AUM.

Outlook and guidance

• Anticipates continued growth in servicing business with new mandates from HSBC and RAMS portfolios, potentially bringing AUM close to $40 billion.

• Expects market headwinds from regulatory changes, inflation, and interest rate uncertainty, but remains focused on product innovation, technology, and operational efficiency.

• Business model diversification continues, with capital-light third-party servicing AUM now equal to lending AUM post-RAMS acquisition.