Plenti delivers 140% year-on-year growth, brings forward profitability

Plenti delivers 140% year-on-year growth, brings forward profitability

ASX-listed fintech Plenti Group has provided a trading update for the quarter ended 30 September 2021 (Q2 FY22), with plenty of highlights including:

  • Record quarterly loan originations of $256.4 million, 140% above prior corresponding period (PCP) and 18% above prior quarter
  • Record monthly loan originations of $95.5 million in September, 159% above September 2020, which at that time represented a record month for loan originations
  • H1 FY22 loan originations of $473 million, 183% above PCP and 56% above prior half
  • Loan portfolio increased to $915 million, 110% above PCP and 21% above prior quarter
  • Inaugural asset-backed securities $306.3 million transaction completed, significantly reducing funding costs
  • Exceptional credit performance maintained with 90+ day arrears at 26 basis points
  • Financial priorities of $1 billion loan book and monthly Cash NPAT profitability target dates brought forward to the current quarter ending 31 December 2021

Commenting on the record quarter, Daniel Foggo, Plenti’s Chief Executive Officer, said, “I am delighted to report yet another outstanding quarter for Plenti, with record quarterly loan originations across each lending vertical. By continuing to take market share, Plenti has achieved strong growth despite COVID-induced lockdowns.

“This strong growth along with the high level of operational leverage from our technology-led business model has accelerated our targeted timeframes for achieving a one-billion-dollar loan book and reaching Cash NPAT profitability, now targeted by end December 2021.

“I am incredibly proud of each member of the Plenti team for their relentless focus on delivering faster, fairer loans to our partners and customers, while continuing to drive towards our mission of building Australia’s best lender.”

Plenti achieved record quarterly loan originations of $256.4 million in Q2 FY22, 140% above the PCP and 18% above the prior quarter. A new monthly record of $95.5 million in loan originations was set in September, representing 159% growth versus September 2020, which at that time represented a record month for loan originations. Each lending segment achieved a record quarter of loan originations:

  • Automotive loan origination growth reflected continued gains in market share, driven by Plenti’s on-going investments in technology and product development, and sales and distribution capabilities;
  • Renewable energy finance growth was driven by the continued adoption by referral partners of Plenti’s buy-now-pay-later offering, as well as the accreditation of an additional 50 commercial partners; and
  • Personal lending growth of 136% versus PCP showed the resilience and depth of Plenti’s multi-channel customer reach and digital distribution capabilities, and also reflected the comparable quarter in FY21 being impacted by COVID-19 related factors.

Loan origination growth versus the prior quarter was achieved in all states and territories except for the ACT. Restrictions in place in NSW reduced the relative contribution of NSW loan originations by over 4% across all loan products (and over 6% in personal loans) compared to the average over the prior 12 months, presenting a potential growth catalyst as re-opening proceeds.

Importantly, this strong loan origination growth was achieved without compromising credit quality. The weighted average new borrower Equifax credit score during the quarter was 828, equal to the portfolio weighted average score of 828 at the end of June 2021.

Plenti’s loan portfolio increased to $915 million at 30 September, up 110% from 30 September 2020 and up 21% from the end of June 2021.

Exceptional credit performance maintained

Plenti maintained its exceptional credit performance during the quarter.

Annualised net losses for the quarter were approximately 70 basis points, reflective of the prime attributes of Plenti’s loan portfolio and strong underlying borrower characteristics.

90+ day arrears were 26 basis points at the end of the quarter, down from 35 basis points at the end of June 2020.

Inaugural ABS transaction significantly reduced funding costs

Plenti completed a $306.3 million asset-backed securities transaction during the period, which substantially reduced the cost of its automotive loan funding. 87.8% of the notes were rated Aaa by Moody’s, allowing Plenti to achieve a 0.97% day one weighted-average margin above one-month BBSW on notes sold, reducing the all-in funding costs for these receivables by over 100 basis points. Additionally, Plenti’s equity contribution was reduced to 0.50% of the loan receivables.

Plenti continues to fund the majority of its new loan originations from its two warehouse facilities, with funding flexibility, capacity and diversity enhanced by Plenti’s two investor marketplace platforms.

Financial priorities brought forward

Plenti is pleased to bring forward the expected timing for achieving two of its financial priorities set out in its FY21 results presentation:

  1. Growth – Plenti expects to achieve a $1 billion loan portfolio by the end of December 2021 (previously by March 2022); and
  2. Profitability – Plenti expects to achieve positive monthly Cash NPAT by the end of December 2021 (previously by June 2022), assuming consistent credit performance.

Plenti continues to target a cost to income ratio of below 35% over the medium term.