Prospa reports strong Q3 but Q4 hard hit by COVID

Prospa reports strong Q3 but Q4 hard hit by COVID

The SME lender has reported “solid” performance in the March quarter, but revealed it was “materially impacted” by COVID-19 in April and May, originating just over $8.7 million in that period.

In an update to the ASX, SME lender Prospa revealed that it had a “solid performance” in the third quarter of the financial year 2020 (Q3FY20), with (unaudited) total loan originations of $122.8 million, up 21.5 per cent on the prior corresponding period ($101.1 million).

For this quarter, group revenue was also up 13 per cent on the prior corresponding period, to $37.4 million, with the business delivering average gross loans during the quarter of $465 million, up 41.7 per cent.

However, the SME lender outlined that the coronavirus pandemic has “materially impacted” its performance for the months of April and May – when Australia was in the midst of its lockdown and small businesses in Australia and New Zealand faced COVID-19-related pressures.

Citing that it had made “pre-emptive adjustments to its underwriting parameters and credit assessment model” to “reflect the current health and macroeconomic environment as well as sensitivities in industry-specific small-business trading models” – as well as focusing on supporting existing customers – Prospa noted that originations for Q4FY20 (up to 31 May 2020) were “slowed”.

The business lender revealed originations were just over $8.7 million, including SME Guarantee Scheme supported loans.

It added that approvals are expected to run at “a lower than usual rate for the remainder of CY20” to meet its static loss rate range of 4-6 per cent over the cycle.

However, the SME lender said it is now seeing improved demand in both Australia and New Zealand.

To read more, please click on the link below…

Source: Prospa reports strong Q3 but Q4 hard hit by COVID – Mortgage Business