Plenty to celebrate: Fintech lender builds $1.3 billion loan book in record quarter

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In a year of rapid growth for Plenti, the company continues to achieve significant milestones, with its loan portfolio now well over the $1 billion mark.

Fintech lender Plenty Group (ASX:PLT) achieved a loan book of $1.3 billion in a record Q4 FY22.

The company originally planned to hit its $1 billion loan portfolio target for the fourth quarter of FY22, which it achieved well ahead of forecast in November last year, after record lending across its three lending verticals – automotive, renewable energy and personal in the third quarter of FY22.

Fourth quarter highlights include record quarterly loan originations of $321.9 million, 87% above prior corresponding period (PCP) and 5% above prior quarter, despite seasonal impacts usual.

The first asset-backed securities (ABS) on renewable energy and personal loans significantly reduced financing costs on $280 million of receivables.

Photo: Supplied

Diversified and profitable financing

Plenti completed a $280 million ABS transaction in February, which significantly reduced funding costs for the underlying receivables and freed up capacity in Plenti’s renewable energy and personal loan warehouse.

ABS pricing was supported by $65 million of notes certified green under the Climate Bonds Standard and 76% of notes rated Aaa by Moody’s.

The transaction also reduced Plenti’s equity funding requirements for the underlying receivables, freeing up capital for the company to fund loan portfolio growth.

Rising expectations for central bank rate hikes meant that Plenti experienced increases in funding costs on new loans issued during the quarter.

Higher funding costs on new loans were partially mitigated by increases in borrowing rates. Plenti expects borrowing rates to continue to rise over the coming months as the market adjusts to rising funding costs.

Plenti has also entered into a corporate loan facility agreement with an Australian lender to provide capital to support the continued growth of its business.

The facility limit is tied to the size of Plenti’s securitized loan portfolio, providing the ability to access more capital in line with loan portfolio growth and was initially drawn down to $18 million.

Improved profitability

Profitability guidance was upgraded in March when a positive cash NPAT forecast for FY22 was announced, marking a major milestone for the company.

The improved earnings forecast reflects the strength of Plenti’s loan book growth and the technology-driven operating leverage that is helping the company continue to gain market share.

Register loan applications

Loan originations in January and February were robust although they reflected the usual seasonal impacts. A new monthly record of $124.6 million in loan originations was reached in March, driven by record auto and personal loan originations.

Renewable energy financing issuance was impacted throughout the quarter by rains and flooding in Queensland and New South Wales, which limited domestic solar and battery installations.

Plenti’s loan portfolio grew and stood at $1.3 billion as of March 31, 2022, 111% above PCP and 17% above the prior quarter.

Maintaining exceptional credit performance

Plenti achieved strong loan production while maintaining its outstanding credit performance during the quarter. Credit performance is underpinned by its proprietary credit decisioning and pricing technology and backed by data it has derived from funding over 100,000 loans since lending began in 2014.

Equifax’s weighted average credit score for new borrowers during the quarter was 847, above the portfolio’s weighted average score of 832 at the end of December 2021.

Annualized net losses for the quarter were small at around 42 basis points, reflecting the preferred nature of Plenti’s borrowers. Overdue amounts over 90 days were 26 basis points at the end of the quarter.

Positioned for further growth

Plenti CEO Daniel Foggo said the company had another stellar quarter, setting it up well for future growth.

“I am incredibly proud of the Plenti team for their relentless focus on delivering faster and fairer loans to our clients, while continuing to pursue our mission to build Australia’s best lender,” he said. -he declares.

“We are excited about the year ahead, with our team focused on leveraging our proprietary technology to execute our program of product innovation and efficiency initiatives, while continuing to capture market share of profitably in each of our three main vertical markets.”

This article was developed in conjunction with Plenti, a Stockhead advertiser at the time of publication.

This article does not constitute advice on financial products. You should consider obtaining independent advice before making any financial decisions.

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