Pepper Money (PPM) H2 2024 earnings summary

Executive summary

• Originations reached AUD 7 billion in 2024, up 16% in the second half, with strong growth in both mortgage and asset finance volumes.

• Net profit after tax was AUD 98.2 million, down 12% year-over-year due to higher loan loss expenses, despite a 9% increase in underlying profit before tax and loan loss expense to AUD 209.2 million.

• Total AUM closed 2024 at AUD 19.1 billion, with lending AUM at AUD 15.9 billion and servicing AUM at AUD 3.3 billion.

• Board declared a final fully franked dividend of AUD 0.071 per share (60% payout ratio), with total dividends for 2024 up 41% to AUD 53.2 million.

• Customer Net Promoter Scores and employee engagement outperformed industry benchmarks across all products.

Financial highlights

• Net interest margin (NIM) improved to 1.97%, up 12bps year-over-year; mortgage NIM at 1.65% (+8bps), asset finance NIM at 2.55% (+5bps).

• EBITDA decreased 5% to AUD 188.5 million; total operating income down 1% year-over-year to AUD 386.6 million.

• Loan loss expense increased 74% to AUD 69.3 million, mainly due to asset finance arrears and insolvencies.

• Operating expenses increased 4% to AUD 246.7 million, mainly due to impairments and fair value adjustments.

• Unrestricted cash at year-end was AUD 124 million.

Outlook and guidance

• Expectation of further interest rate reductions and improved consumer confidence in 2025, supporting a return to market growth.

• Positioned to capture growth opportunities as market conditions improve, with sufficient funding headroom and diversified business lines.

• Confident in ability to grow across business areas, focusing on efficiency, technology, and product expansion, with a target to help 1 million customers by 2029.

• Anticipates continued product innovation, especially in SMSF and Sharia mortgage lending.

• Strategy remains focused on building sustainable AUM with acceptable risk-adjusted returns.