Despite the ubiquitous BNPL decline, consumer lending group humm (ASX: HUM) appears to be taking the blow well. To begin with, the Company undertook a private placement in August 2023, providing $760.7 million in increased funding capacity for commercial growth. And thanks to its BNPL growth, the Company has proposed a fully franked final dividend proposed of 1.0 cent per share bringing the FY23 full year dividend to 2.0 cents per share.

That said, in FY23, its profit of $75 million was down 2% on FY22, and cash NPAT was down 53% to $24.1 million. Its statutory Net Profit After Tax of $2.9 million was down from $170.3 million.

hummgroup Chief Executive Officer, Stuart Grimshaw, said, “hummgroup made great progress this year in executing its strategy to rationalise products and reduce costs, while maintaining profitability and deliver growth in its core businesses. The Group has removed $18.6m in costs this year and is on track to deliver $20 million – $25 million in annualised cost savings.” 

The last twelve months have seen the Group successfully reposition its Consumer Finance business to focus on profitability, with the majority of costs associated with existing non-core, lower value products removed this financial year. In Q4, its buy now pay later (BNPL) Cards portfolio saw an acceleration in volumes, indicating a return to growth.

Australia Cards volumes stood at $514.9 million, up 8% on FY22, thanks to increased card spend particularly in the travel sector which has seen spend increase as the sector returns to more normal levels.

Grimshaw added, “Our Commercial business delivered a strong performance, producing record volume growth while improving its credit quality, with net loss/ANR of 0.5%. This business continues to demonstrate impressive operating leverage, with 57% receivables growth delivered with less than a 2% increase in operating costs. In FY23 front book net interest margins for Commercial increased along with the growth in volume and receivables.”

Humm Group is optimising its capital structure to include increased mezzanine funding to support growth in receivables, re-commitment to a dividend payout ratio of 30%–40% of Free Cash Flow, and the initiation of a $10.0m share buyback.

The business experienced lower losses across its Aus commercial portfolio, thanks to its superior credit decisioning, diversification and processes resulting in a net loss of 0.5%. Given the impressive performance of the Commercial business sector in Australia, hummgroup plans on recreating its broker-centric approach in the New Zealand market. 

In FY24, the Group will focus on improving its local credit decisioning engine and speed, giving it competitive edge. Besides Australia, humm will focus on growing its Irish business and maintaining its UK credit license. Combined with its Canadian business, hummgroup’s international operations have grown volumes by 26% on pcp.

As of June 2023, humm group had $112 million of cash.