Pepper Money (PPM) H1 2024 earnings summary

Executive summary

• Originations totaled AUD 3.3 billion in H1 2024, with over 37,000 new customers and total AUM at AUD 19.3 billion, up 2% year-over-year.

• Net profit after tax for H1 2024 was AUD 46.1 million, down 11% year-over-year, reflecting lower operating income and higher loan loss expenses.

• Interim dividend increased to AUD 0.05 per share (47.5% payout ratio), up from 3.5 cents in 2023.

• Loan servicing AUM surged 149% year-over-year to AUD 2.3 billion, supporting growth in capital-light revenue streams.

• Acquisition of the remaining 35% of Stratton Finance completed in March 2024 for AUD 41.9 million.

Financial highlights

• Net interest margin (NIM) stabilized at 1.92% in H1 2024, with Mortgages NIM at 1.60% and Asset Finance NIM at 2.52%.

• Profit before tax and loan losses was AUD 108 million, up 13% year-over-year.

• Statutory and pro forma NPAT for H1 2024 was AUD 46.1 million.

• EBITDA reached AUD 89.8 million.

• Total operating income was AUD 186 million, down 4% year-over-year, while total expenses decreased 2% to AUD 119.6 million.

Outlook and guidance

• NIM and funding margins are stabilizing, with funding markets showing signs of improvement.

• Expectation of continued NIM stabilization and potential for volume growth in H2 2024, depending on market conditions.

• Inflation moderating and interest rate rise expectations slowing, but cost of living pressures and low confidence remain headwinds.

• Management maintains a cautious approach to credit risk, holding a AUD 10 million post-model overlay for macroeconomic uncertainty.