Lender sees broker numbers rise by a quarter

According to the group’s financial results for the 12 months ending 31 December 2016, the surge in mortgage broker numbers has helped the company deliver a record level of new originations for Australian residential mortgages in the calendar year, coming in at $2.53 billion, or 36 per cent more than the year before.

Speaking of the results, Pepper’s co-group chief executive officer, Patrick Tuttle, said: “The reason for our record originations and above system growth in Australia is simply because more consumers and brokers are recognising the competitiveness and breadth of Pepper’s mortgage product range, and our position as one of the country’s leading non-bank lenders.”

Pepper also stated that auto and commercial finance brokers are increasingly turning to pepper for its asset finance offerings, with this branch of the group bringing in a record $673 million in originations in 2016, up nearly 70 per cent (from $398 million) the year before.

The company has revealed that it aims to have 3,100 brokers in its distribution network by the end of the 2017 calendar year.

Overseas performance

The group as a whole reported adjusted net profit after tax of $61 million and a statutory net profit after tax of $61.6 million for the year ended 31 December 2016.

As well as strong performance in Australia, the diversified group has seen strong performance from its overseas operations.

Pepper increased its combined lending and servicing assets under management (AUM) by 15 per cent to $52.4 billion at the end of CY16, up from just $4 billion in 2012. This represents a compound annual growth rate (CAGR) of 91 per cent.

Each of Pepper’s operating regions in Australia, Asia and Europe added to this growth.

Originations in its South Korean residential mortgages and consumer lending grew 52 per cent year on year, with 2016 levels reaching $1.28 billion.

Meanwhile, Pepper’s Europe-based asset servicing business managed to grow assets under management (AUM) by 12.4 per cent over 2016 to 46.6 billion.

Pepper’s lending activities in Europe are in the early stages of growth, having commenced residential mortgage lending in the UK in 2015.

Mr Tuttle commented: “Pepper’s strong track record of delivering double digit profit growth continued in 2016... This is being achieved organically through record loan originations in Australia and South Korea, along with continued growth in recurring earnings from our pan-European servicing platform.

“Our 2016 result also confirms the strong and emerging profitability of Pepper Savings Bank in South Korea, coupled with a continuing and meaningful contribution from our investment in the Prime Credit business in Hong Kong and China.

“The strategic acquisitions that we have made over the past three to five years are also starting to bear fruit as we see our residential and consumer lending businesses in the UK, Ireland and Spain building scale.”

Pepper said that, subject to market conditions, it aims to have an Adjusted NPAT of at least $67.5 million, excluding performance fees, for the calendar year 2017.

The directors of Pepper Group have declared a 5.4 cents per share fully franked dividend for the six months to 31 December 2016, taking its total dividend paid to shareholders for 2016 to 8.4 cents per share.

The record date for the 2H16 dividend will be 7 March 2016 and the payment date is 12 April 2016.

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