The Australian housing market has left people in limbo with mortgage pressures forcing them to pinch pennies. As they cast around for low-cost lenders, fintech loan providers like Plenti (ASX: PLT) are enjoying their time in the spotlight.
In Q2 FY23, Plenti’s loan portfolio increased to $1.67 billion, 51% above Q2 FY22 and 8% above Q1 FY23. It saw significant quarterly loan applications of $297 million, up 10% on Q1 FY23. With revenue of $37.4 million and positive cash NPAT, the Company is on track to meet its second-half FY23 goals.
Commenting on the quarter’s results, Daniel Foggo, Plenti’s Chief Executive Officer, said, “This was another positive quarter for Plenti, with strong loan portfolio growth achieved whilst also increasing net interest margins on new originations, demonstrating the continued appeal of Plenti offerings to both referral partners and customers.”
Established in 2014, Plenti is a FinTech loan lender with a diversified portfolio. It provides loans through smart technology and allows borrowers and lenders to connect directly.
Plenti’s loan portfolio—a key revenue driver—increased to $1.67 billion by 31 December 2022, up 51% on the previous corresponding period and up 8% from 30 September 2022. From the looks of it, people prioritised their transportation needs, with Plenti’s loan portfolio driven by automotive loans up 60% to $958 million. It was followed by personal loans, up 40% on December 2021 to $532 million.
The Company reported strong credit performance with annualised net credit losses of 69 basis points and 90+ day arrears of 35 basis points at the end of the period. It enhanced its retail investor platform to expose investors to Plenti ABS (asset-backed securities) notes for lenders with a greater appetite for risks and subsequent profits.
For new loans, net interest margins increased in the quarter even though the overall portfolio’s net interest margin remained rather stable. The margins were offsetting because of an interest rate increase in one of Plenti’s automotive warehouse facilities, extended in November 2022.
Additionally, during the quarter, Plenti sold off defaulted loans to a third-party debt purchaser, with the financial outcome of this transaction expected to be recognised in the final FY23 results. More such debt sales are expected in the coming months as Plenti continues to scale its business.
Plenti has been reporting consistent sales growth for a while now. In the first half of FY23, the Company recorded revenue of $64 million, increasing over 70% on H1 FY22. In fact, such results have fueled its ambitions to build a $5 billion loan portfolio in 2025.
To further boost its profits, Plenti has renewed its focus on growing its retail investor platform, the Plenti Lending Platform. The investment markets were simplified and reshaped, thus enabling retail investors to fund a higher proportion of Plenti’s lending.
Foggo added, “We continue to invest in extending our technology-led customer experience and efficiency advantages as we work towards achieving our mission of building Australia’s best lender.”
Over 60% of its borrowers are homeowners in their 40s, representing one of the most significant demographics in Australia grappling with inflation right now. For them, Plenti’s faster and cheaper loans are super beneficial and timely, helping them achieve their financial milestones, like buying a home.
Given the state of affairs right now, by March 31, 2023, Plenti aims to reach a loan portfolio of about $1.75 billion.
Alinda is a Business Reporter for The Sentiment
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