Harmoney earns cash profits but growth in New Zealand loan portfolio is subdued


Harmony’s general manager, David Stevens. Photo / Provided

Consumer lender Harmoney made a first cash profit on strong revenue growth, but growth in its New Zealand loan portfolio was muted due to tighter credit law.

The NZX/ASX-listed company had a statutory net cash profit of $212,000 in the year to June 30, compared to a loss of $12.28 million. Its pro forma cash profit was $1.49 million against a loss of $356,000.

The company also reduced its statutory net loss to $20.18 million from $29.3 million.

Its turnover increased by 15% to 91 million dollars while its net interest margin fell from 10.6% to 12.1%.

David Stevens, chief executive of Harmoney, said achieving profitability based on statutory and pro forma cash profit was an important milestone for the company.

“Our performance over the past year highlights the scalability of our 100% direct-to-consumer model and its potential to continue to deliver.

“Demand for a Harmoney loan has never been stronger, with our platform consistently attracting over 12,000 new client accounts each month, which has resulted in account acquisition growth of 57% on pcp. [prior corresponding period].”

Its loan book grew 37% from $501 million to $685 million, but most of that growth occurred in its Australian arm. The Australian loan portfolio grew from AU$135 million to AU$287 million, while the New Zealand portfolio grew only 3% from AU$358 million to AU$370 million.

Harmoney noted that New Zealand’s loan portfolio had been affected by the tightening of the Credit Agreements and Consumer Credit Act in December, which had since been partially relaxed.

Stevens said while there were challenges in the market, he believed there was still significant opportunity to grow the business.

“We see the personal loan market as relatively stable, with huge growth opportunities for Harmoney.

“While most personal loans are still dominated by banks and traditional lenders,
Harmoney’s personalized, competitive and easy-to-use offers offer customers a compelling alternative.”

Its pro forma credit losses rose 12% from $18.8 million to $20.9 million, but fell as a percentage of gross loans from 3.9% to 3.6%.

Stevens said he would target a 10% net interest margin over the coming year and expect loan portfolio growth and net cash income growth. Although he did not provide any indication of growth.

Harmoney shares rose 2c to 77c on the NZX just after 3pm, but are down 60.69% in the past year.


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