Pepper Money (PPM) H2 2025 earnings summary

Executive summary

• Achieved record originations of AUD 10.3 billion (up 47% year-over-year) and total AUM of AUD 21.8 billion (up 14%), with mortgages at AUD 6.8 billion (up 66%) and asset finance at AUD 3.5 billion (up 20%).

• Pro forma NPAT increased 7% to AUD 104.8 million, with underlying profit before tax and loan loss expense up 13% to AUD 237.4 million.

• Net interest margin (NIM) rose to 2.05% (up 8 bps), driven by asset finance margin expansion and business diversification.

• Fully franked dividends for CY2025 totaled AUD 0.267 per share (AUD 118.6 million), up 123% from 2024, delivering a 16.1% yield.

• Cost-to-income ratio improved by 4% to 50.5% due to disciplined cost management and scale efficiencies.

Financial highlights

• Total operating income grew 1% year-over-year to AUD 388.8 million.

• Loan loss expense increased 31% to AUD 90.6 million, reflecting portfolio growth, model recalibration, and lower provision release.

• Total loan loss provisions rose to AUD 138.6 million, with coverage ratio at 0.83% of lending AUM.

• Net assets closed at AUD 869.9 million, up from AUD 855.6 million in December 2024.

• Net interest income was AUD 335.6 million, down 2% year-over-year, impacted by product mix and increased whole loan sales.

Outlook and guidance

• Positioned for continued growth in 2026, leveraging business diversification, technology investment, and strong funding headroom.

• Interest rates and geopolitical risks remain key external risks, with potential for further RBA rate rises.

• Ongoing focus on capturing market opportunities in mortgages, asset finance, and loan servicing, with emphasis on capital-light annuity streams and technology-driven efficiency.