Pepper Money (PPM) H2 2024 earnings summary

Executive summary

• Achieved AUD 7 billion in originations for 2024, up 16% versus 1H 2024, with strong second-half 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.

• Board declared a final fully franked dividend of AUD 0.071 per share, with total dividends for 2024 up 41% on prior year and a 60% payout ratio.

• Employee engagement and customer Net Promoter Scores remained high, outperforming industry benchmarks, with an employee engagement score of 75.

• Total AUM at year-end was AUD 19.1 billion, with lending AUM at AUD 15.9 billion and servicing AUM at AUD 3.3 billion.

Financial highlights

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

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

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

• Loan loss expense increased to AUD 69.3 million from AUD 39.9 million in 2023.

• 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.

• Funding markets remain stable, with the company positioned to originate at scale.

• Target to help 1 million customers by 2029.