When it comes to lenders, cash profit shows the real picture

• Why EBITDA doesn’t cut it for lenders
• Cash profit shows the real score
• MoneyMe flips the script with safer loans

When BHP or Woolies talk profits, analysts can happily flick through EBIT and EBITDA numbers to get a feel for the business.

Strip out interest and tax, and you’ve got a neat view of how many dollars the core engine is pumping out.

Interest, in their world, is just the cost of borrowing, an external add-on.

For banks and non-bank lenders, however, interest isn’t an add-on, it’s the oxygen they breathe.

The Big Four banks (CBA, Westpac, ANZ, NAB), for example, don’t report EBIT or EBITDA in their financial results.

Their whole business model, like the non-banks’, is built on the spread between the money they lend out and the money they borrow in – loans versus deposits or wholesale funding.

Take interest out of the picture, and you’ve just killed the story. It’s like trying to describe a pub without talking about beer.

Same with loan losses.

If BHP writes down a mine, or Qantas takes an impairment on an aircraft, it’s a one-off. You can adjust for it and move on.

But for lenders, bad debts are part of the daily grind. Provisions for when loans go sour are a central part of running the shop.

But EBITDA ignores provisions for these bad debts, and if you strip them out, you end up with a flattering number that misses the reality.

Cash profit tells the real story

That’s why EBITDA doesn’t really tell the full story for lenders.

Some, like Wisr (ASX:WZR), still report it, but for most in the sector it doesn’t really stack up.

So instead, some lenders like MONEYME (ASX:MME) have made “operating cash profit (OCP)”  their key internal measure.

OCP strips that clutter away, giving a cleaner view of how MME is actually performing.

It strips things back to the basics.

According to MoneyMe’s own definition, OCP “measures the net impact of the cash inflows and outflows resulting from MoneyMe’s operations.

“This does not include cash movements related to the principal repayments received or funding of loan originations.”

Meanwhile, “statutory profit” is of course still the official bottom line in the annual report, the number that ticks all the accounting boxes.

The problem is it can get cluttered with one-offs – things like writedowns, restructuring costs or mark-to-market swings – that don’t always reflect the core health of the lending business.

For investors, and frankly for the lenders themselves, operating cash profit is the truest read-through of the business.

A bigger book, built better

So with that, we come to one of the standout turnaround tales in the non-bank lending sector this reporting season.

MoneyMe has pulled itself off the canvas and swung hard enough to make investors sit up again.

In FY24, MoneyMe’s operating cash profit was negative $8 million.

In FY25, it flipped to a positive $24 million (which includes a one-off ~$10m cash benefit in 1H25).

Behind that cash profit is a loan book that’s not just bigger, but built on stronger foundations.

A year ago, it was sitting at $1.2 billion. Now it’s $1.6 billion.

But the real shift is in its makeup: almost two-thirds of MoneyMe’s loans are now secured, and the average borrower’s Equifax score has climbed.

Why does that matter?

Because the quality of the book dictates everything else – from credit losses, to funding terms, to how lenders and investors perceive the risk.

And MME’s numbers prove it: credit losses have fallen for the second year running, provisions have eased, and Moody’s has rewarded that performance with rating upgrades.

Resilience builds

Some investors twitch when they see revenue dip or margins shrink, and yes, both happened in FY25 for MME.

But that was the trade-off for building a higher-quality, more secure loan book.

You can charge more to risky borrowers, but you pay for it later when defaults climb.

What MoneyMe is doing is playing the long game.

“With scale increasing, operating leverage growing, and credit losses and cost of funds coming down, our ongoing cash generation will, in time, see us return to normalised and statutory profitability,” said CEO, Clayton Howes.

Investors don’t just want speed.

They want resilience, and MoneyMe is starting to show both.

At Stockhead we tell it like it is. While MoneyMe is a Stockhead advertiser, it did not sponsor this article.