Pepper Money (PPM) H2 2025 earnings summary

Executive summary

• Achieved record originations of AUD 10.3 billion (+47%), with mortgages at AUD 6.8 billion (+66%) and asset finance at AUD 3.5 billion (+20%), marking the 25th anniversary with exceptional growth.

• Total AUM reached AUD 21.8 billion (+14%), with strong growth in both lending and servicing portfolios.

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

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

• Cost-to-income ratio improved to 50.5% (down 4%), reflecting disciplined cost management.

Financial highlights

• Net interest margin (NIM) expanded to 2.05% (+8bps), with asset finance NIM at 2.85% (+31bps) and mortgages at 1.54% (-12bps).

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

• Loan loss expense increased 31% to AUD 90.6 million, mainly in asset finance, reflecting portfolio growth and model recalibration.

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

• Total pro-forma expenses were AUD 242.0 million (+2%), with employee benefits expense up 5%.

Outlook and guidance

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

• Entered 2026 with double-digit application growth and solid funding markets despite geopolitical issues.

• Interest rates remain a key risk, with potential for further RBA rate rises to control inflation.

• Ongoing focus on capturing market opportunities in mortgages, asset finance, and loan servicing.

• Focus on capital-light annuity streams, new product pipeline, and technology-driven efficiency.