With the economic environment in the midst of raising interest rates and central banks attempting to dampen inflation, investors have been keeping an anxious eye on Australian lenders to see who will hit profitability sooner and avoid bad debts arising from raised rates. 

With this in mind, loan-only businesses have been racing to scale up operations to survive in the current environment. Plenti Group Ltd (ASX: PLT) have been in high gear racking up their loan book to over $1.3bn as they compete to be one of Australia’s best lenders. Their mission is based on reliability where they focus on delivering ‘faster, fair loans through smart technology’ so that they become the no.1 choice for customers.

While only achieving a positive NPAT in October 2021 for the first time, Plenti seems to keep pulling away from its competitors after delivering yet again another record year. Stated in their annual report, the Company has achieved strong loan origination growth for the year, gaining over 134% YoY, sitting at $1.1bn. Delivering on targets, revenue for the period came in at $87.3m, up 72% YoY. 

Being NPAT positive is a massive milestone for the Company, delivering a FY22 (12 months ended 31 March 2022) NPAT of $0.5m.

The business operates in three lending verticals – personal loans, automotive lending and renewable energy. All three segments achieved record growth, with automotive lending being the outperformer. Loan originations for automotive grew to $639.3m, growing 177% over the previous corresponding period (pcp). With renewable energy loans at $98.3m, up 72% on pcp including personal loans at $364.7m, up 100% on pcp. 

Some aspects of the financial results are less comparable between the previous period. Costs relating to the IPO and disruptions from COVID-19 deeply affected the Company which was reflected in the half year report 2021, where there was a reported a net loss after tax of $7.45m, 117% worse than 1H21 where net loss after tax was $3.4m. 

“Achieving positive cash NPAT is a major milestone for Plenti and a testament to the strength of our technology-led business model and talented team. It rounds out what has been an exceptional year of growth as we continue to capture market share in all lending verticals and set new industry standards,” said Plenti CEO, Daniel Foggo. 

The Company has diversified and deepened its funding sources during the year, establishing a third warehouse facility to specifically fund electric vehicle lending. It has also recently completed two asset-backed-security (ABS) transactions across roughly $580m in loan receivables in February. This was to reduce funding costs on the underlying receivables which freed up capacity in the Company’s renewable energy and personal loan warehouse facility – this in turn released capital back to the business to fund further loan portfolio growth. 

Plenti’s outlook for the year is to achieve market leadership in each of its segments, by extending its products and technology to optimise its funding. The focus for FY23 will be on the yield it achieves through new loan originations while driving improved operation efficiencies by reducing cost-to-income by 40%. The Company hopes to achieve even more growth in cash NPAT as it remains on track to achieve a $5bn loan portfolio in 2025. 

“Underpinning this is a relentless focus on delivering exceptional experiences and growth initiatives. With our diverse funding options, continually improving operational efficiencies as we scale, and strong risk management track record, we are well placed to continue delivering profitable growth.”