2024 financial year has been marked by significant progress for the non-bank lender operating in the private credit sector, despite persistent and emerging challenges confronting the broader economy.
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Finexia Financial Group says the 2024 financial year has been marked by significant progress for the non-bank lender operating in the private credit sector, despite persistent and emerging challenges confronting the broader economy.
While the net profit was down compared to FY23, Finexia Financial Group (ASX:FNX) says a marked shift towards recurring interest income was evident, further demonstrating the group’s unwavering commitment to its private credit strategy.
Key financial metrics for FY24 include:
FNX’s revenue increased by 5.91% in the year to$15.76m in FY24 compared to $14.88m in FY23.
However, in an ASX announcement the company says of greater significance is the pronounced change in the source and composition of the revenue over the period.
Listed on the ASX in 2015 as a securities dealer/licensee, FNX has over the years pivoted and evolved its strategy towards the lending sector.
Focusing on markets and opportunities that major banks have traditionally dominated but have recently abandoned, FNX’s strategy is aimed at becoming the leading private lender to the childcare sector in Australia.
FNX says income generated through lending activities grew by 51% to $11.37m in FY24, marking the strategic pivot to private credit.
During the year, FNX’s total loan book grew by 43% to $166.8m as of June 30, 2024, which the company says is a strong endorsement of its commitment to private credit.
The total loan assets on FNX’s balance sheet grew by 136% to $58.4m, up from $24.7m in FY23.
The company attributes the growth to continued momentum in demand for the Finexia Childcare Income Fund from both investors and childcare operators.
FNX says the growth in loan assets was supported by a securitised note issuance successfully undertaken with Income Asset Management (IAM), acting as lead manager with a facility size of $50m.
Despite an acceleration in loan assets in FY24, impairments fell to 0.004% compared to 1.005% in FY23, which the company says is indicative of the credit quality originated.
FNX says the net interest margin (NIM) including associated lending fees was largely preserved at 4.59% in FY24.
While the Finexia Childcare Income Fund is expected to be a major driver of future revenue and profit growth, FNX continues to explore additional opportunities within the private credit market, both independently and through strategic partnerships.
FNX says it’s the board’s view that the optimal footing for its private credit strategy is to specialise in several key thematics supported by multiple funding sources and partners.
The company says in FY24 the securities and trading division continued to face challenges, namely reduced market liquidity, limited primary market opportunities, and shifting consumer behaviour to online trading.
In terms of overall results, the Group’s other investments, including Stayco, contributed $4.03m of income to the top line.
“The board remains vigilant to the challenges facing its various investments, regularly reviewing the group’s portfolio of businesses to ensure optimisation of its assets for sustained future shareholder value accretion,” FNX says.
FNX was anticipating FY24 to be a smaller net profit year with operating expenses up 40% on FY23 as the company looked to enhance the business for future growth.
Expenditure was mostly directed towards substantial investment in people and systems, which FNX says aimed to adequately resource the business for stepped up operational scalability and efficiency.
“We remain confident that this strategic investment, along with our program of continuous cost improvement, will deliver benefits to our shareholders in FY25 and beyond,” FNX says.
In 2024, an interim dividend of 0.5 cents was paid to shareholders at the half year. However, a final dividend has not been declared for the full year.
The current dividend policy is under review by the board, with any decision on future dividends to be announced to the market at the appropriate time.
“We would like to acknowledge and extend our gratitude to two key stakeholder groups – our staff, whose dedication and commitment have been instrumental in achieving the progress made this year, and our shareholders, whose continued support has been invaluable,” FNX added.
This article was developed in collaboration with Finexia Financial Group, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
