Media mogul-backed bank challenger close to breaking even

SocietyOne, a peer-to-peer lender that is partly owned by Rupert Murdoch, Kerry Stokes and James Packer’s companies, expects to start making profits within the next 12 to 18 months.

The start-up lender has in recent years been heavily investing in marketing, technology and new staff as it seeks to establish peer-to-peer lending on Australia’s financial landscape, pinching some of the profits banks make from the $100 billion personal credit market.

After a year of rapid loan growth, chief executive Jason Yetton said the lender now faced the prospect of breaking even, though this would depend on how much it invested.

“We think it can reach profitability over the next 12 to 18 months, but to some degree that depends on how much we continue to invest in the business,” Mr Yetton said in an interview with BusinessDay.

“It does take a lot of investment in technology, people, in building the brand, in marketing.”

The move towards profitability follows a capital raising earlier this year from SocietyOne, which also counts a fund owned by Westpac, where Mr Yetton was previously a senior executive, as a shareholder.

Mr Murdoch’s News Corp Australia, Mr Stokes’ investment company Australian Capital Equity and Mr Packer’s Consolidated Press Holdings own slightly more than a third of SocietyOne, it is understood. Westpac’s Reinventure fund holds a share of more than 10 per cent.

Four customer-owned lenders are also shareholders: Beyond Bank Australia, G&C Mutual Bank, Maritime, Mining and Power Credit Union, and Regional Australia Bank.

While SocietyOne is currently loss-making, its progress is a sign of peer-to-peer lending gradually becoming more established in Australia, as it is in the US and Britain.

Peer-to-peer lending is where individuals or institutions lend directly to borrowers over an online platform, cutting out the need for a bank.

Mr Yetton argued the idea was gaining traction with customers frustrated with banks, as well as larger investors in search of decent returns.

Mr Yetton said SocietyOne’s loan book had grown 253 per cent to $110 million in the 2016 calendar year so far, helped by a brand campaign that has sought to pinch the banks’ lower-risk credit card and personal loan customers.

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Source: Media mogul-backed bank challenger close to breaking even – Sydney Morning Herald