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.

• Board declared a fully franked final dividend of 7.1 cps, with total dividends for 2024 at 12.1 cps, up 41% year-over-year and yielding 8.6%.

• Customer Net Promoter Scores outperformed industry benchmarks, and employee engagement remained high.

Financial highlights

• 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.

• 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 was AUD 386.6 million, down 1% year-over-year.

• Loan loss expense increased to AUD 69.3 million, mainly due to higher late-stage arrears and insolvencies in Asset Finance.

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

Outlook and guidance

• Expectation of further interest rate reductions and improved consumer confidence in 2025, with management focused on capturing growth opportunities as market conditions improve.

• Funding markets remain stable, supporting origination at scale and a target to help 1 million customers by 2029.