If you can’t beat them, join them. This is exactly what one unnamed Big 4 bank is doing with neolender Wisr (ASX: WZR) as the senior funder of their new $225 million vehicle financing warehouse as more Australians transition away from traditional banking.
The new warehouse will upsize Wisr’s existing $127m facility which will be rolled into the new $225m one, enabling the lender to issue more vehicle financing products and improve their margins.
“Wisr’s new Secured Vehicle Warehouse will accelerate our revenue, path to profitability and operating leverage. We’ve already demonstrated how we can dramatically improve our underlying loan unit economics with the Wisr Warehouse, delivering a 280% increase in operating revenue in FY21 vs FY20,” said Wisr CFO, Andrew Goodwin.
“Wisr’s aspirations are much larger than our medium-term target of a $1B loan book and as we continue to disrupt, and take market share from the incumbents, this facility will support our growth opportunity in the substantial auto finance market, to build a company of significant scale, profitability and impact.”
Having established a solid business offering personal loans commonly engaged for debt consolidation at low interest rates, Wisr expanded into secured vehicle financing in June 2020.
Since its launch, Wisr has continued to grow its total loan book courtesy of their digital-only financing products where they had a total loan book of $432 million as of 30 June 2021. Of that figure, 20% (or $86m), had come from their new vehicle financing division.
Growth in the vehicle loan originations has been supported by the COVID-19 pandemic where commuters have been shunning public transport where possible. This resulted in a rise in used car sales since the pandemic onset.
Wisr closed out FY21 with strong growth through the year as more Australians continue shifting away from legacy banking systems where deregulation has given rise to customer-focused banking products. This led to Wisr’s 280% increase in operating revenue to $27.2m.
This positioned Wisr to deliver its maiden cash flow positive month in June 2021 where the fintech now has more than 450,000 customer profiles on its platform that have financed more than $611 million in loan originations.
With this growth, Wisr improved its bottom line by 25% to report a net loss after tax of $17.6m which was a substantial improvement on the $23.5m loss for the year prior as they trend towards profitability with $64.8m cash on hand.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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