Harmoney (HMY) H2 2024 earnings summary

Executive summary

• Stellare 2.0, a new cloud-native platform, was fully launched in Australia in July 2024, doubling application approvals and driving a 50% year-on-year increase in Australian new customer originations for that month.

• Achieved fifth consecutive half of positive cash NPAT and loan book growth, with FY24 cash NPAT at NZD 0.7 million and statutory NPAT loss of NZD 13.2 million due to a NZD 9.5 million non-cash impairment from retiring Stellare 1.0.

• Automation and AI-driven processes reduced acquisition costs by 14% year-on-year and lowered the cost-to-income ratio to 24%.

Financial highlights

• Loan book reached NZD 758 million, up 2% year-over-year, with revenue up 15% to NZD 123 million, despite higher funding costs.

• Net interest margin (NIM) contracted to 8.8% (down 80bps), but new lending in Q4 2024 achieved over 10% NIM; portfolio NIM expected to return to 9% in FY25.

• Statutory loss was NZD 13.2 million, including a one-off NZD 9.5 million impairment for Stellare 1.0 retirement; normalized loss was NZD 3.7 million, a 51% improvement.

• Risk-adjusted income margin fell to 4.8% (from 6%), but new business in Q4 2024 exceeded 6%.

• Incurred credit losses increased to NZD 30.7 million (4.1% of average loans), up from NZD 24.6 million (3.6%) in FY23.

Outlook and guidance

• Stellare 2.0 rollout in New Zealand is planned for first half 2025, with full decommissioning of Stellare 1.0 expected to drive further cost savings.

• Targeting a 20% cash return on equity run rate in second half 2025, supported by higher risk-adjusted margins and loan book growth.

• Net interest margin on the loan book expected to return to 9% in FY 2025 as higher rates on new lending flow through.

• Scenario analysis shows 8% loan book growth and 5.4% RAI% would deliver 20% cash RoE.

• Continued investment in AI and automation to further reduce costs and improve customer experience.