After a string of record results and reaching its target of a $1bn loan book, Plenti is now in pole position to achieve maiden profit in the second half.

Fintech lender Plenti Group (ASX:PLT) has once again delivered record results for the first half ending September, after posting similar results in prior periods.

The company announced half-year loan originations of $473 million, up 183% on prior comparable period (PCP).

That took its total loan portfolio to $915 million by the end of the 6-month period, an increase of 110% on pcp. The company announced today it had reached the significant $1 billion milestone just after the end of the reporting period, in November.

Plenti also posted a record half-year revenue of $37 million, up 43% on pcp – which resulted in a bottom line net loss of $2.2m. This was a significant 56% improvement on the last half.

“It was an outstanding half for Plenti. We grew strongly and evidenced our operational leverage, which set us up to achieve profitability in the second half,” said CEO, Daniel Foggo.

 

Major milestones during the half

Automotive loans are still the main driver of Plenti’s portfolio growth, increasing by 218% on PCP to $258 million.

Personal loans grew by 194% to $169 million, and renewable energy loans (finance for solar and battery systems) grew 64% to $46 million.

Growth across the portfolio was supported by advancements in its technology platform which improved customer experience, credit decisioning and pricing, as well as partner integrations.

In automotive, rapid growth was driven by market share gains with specialist auto brokers, while the launch of  the commercial automotive loan segment in May  has doubled Plenti’s addressable market for automotive loans.

This was then further complemented by an expansion into the lucrative electric vehicle (EV) financing market announced last week.

Plenti said it will offer a 50-basis point discount for EV loans on its already highly competitive combustion engine lending rates.

Customers will also have the ability to borrow additional amounts to fund EV-related infrastructure such as chargers, downloadable vehicle upgrades and other accessories.

But despite this exponential growth, Plenti was able to efficiently manage its credit risks, with net realised losses (due to bad debts) of only 0.7%.

According to the company, it’s reflective of the prime attributes of its loan portfolio and strong underlying borrower characteristics where 90+ day arrears were only 26 basis points at the end of the half year.

On the balance sheet, the company has reduced the average cost of funding to 4% in the first half, down by a whopping 2.3% on pcp.

Its $306.3 million asset-backed securities (ABS) transaction during the period has also substantially reduced the cost of its automotive loan funding.

Around 87.8% of the ABS notes were rated Aaa by Moody’s, allowing Plenti to achieve a low 0.97% day one weighted-average margin above one-month BBSW on notes sold.

All this has enabled the company to sit on a strong cash position, with $43.5 million in the bank,unchanged since March despite massive growth in sales volume.

 

Strong outlook ahead

Foggo believes Plenti will continue to perform strongly at the start of the second half-year, and is targeting to fund over $100 million of loans this month.

That will set it up for a financial year-end loan portfolio of over $1.25bn, a huge 25% over its original target of $1bn.

The company is also expecting a maiden profit in the second half of over $1m, which will come on the back of cost efficiencies.

Plenti’s cost-to-income ratio is now below 50%, and is in progress toward its stated medium term target of below 35%.

After a string of record results, Foggo has now set an ambition of reaching a $5 billion loan portfolio in calendar 2025.

“Looking forward, we have a significant growth opportunity in front of us, and we have a clearly defined strategy for achieving our objective of building Australia’s best lender,” he said.

This article was developed in collaboration with Plenti, 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.

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