MONEYME originations drop 71% in a year

The personal lender has been consciously moving to moderate growth over the past year, as it focuses on increasing profitability and building returns for shareholders.

This shift to moderated growth, which came as part of a move to preserve cash balances in response to slowing macro-economic conditions, saw originations drop to $98 million in the three months to 31 March 2023.

The originations for 3Q23 were down $242 million (or 71 per cent) on the same period last year and represented a 13 per cent decrease on the previous quarter.

The moderated growth strategy has seen the lender’s loan book remain relatively flat in FY23, however, its net profit after tax (NPAT) and revenue have been increasing. While it doesn’t provide quarterly NPAT figures, MONEYME has said it delivered $9 million in statutory NPAT in 1H23.

The lender’s gross customer receivables totalled $1.18 billion at the end of March, up 2 per cent year-on-year (but down 5 per cent on the previous quarter).

Speaking at an extraordinary general meeting on Wednesday (17 May) — called to discuss the lender’s partial repayment of its corporate debt facility — chief executive and managing director Clayton Howes said: “We took measured steps to slow growth in the near-term in line with our focus on preserving our cash balances, maintaining our book balance above $1 billion, and managing credit risk while macro-economic uncertainty exists.

“This approach has enabled us to continue to enhance our credit risk management and improve the credit profile of our loan book.”

He flagged that net losses had reduced and the lender had seen “significantly higher credit quality” in its book.

The CEO continued by noting that the third quarter had resulted in “continued momentum and increasing profitability”, reporting $61 million in gross revenue (up 75 per cent on last year).

He commented: “Our focus on margin protection resulted in a net interest margin of 13 per cent for the quarter, an increase on last year and contributing to our robust profit growth. March was another profitable month … and we are on track for a healthy profit result for the full year.”

MONEYME delivered $182 million in gross revenue at the end of the third quarter.

“In the coming months, we will maintain our focus on strengthening our balance sheet through profit generation and a controlled approach to growth in the near term,” he said.

During the EGM, Mr Howes recognised that the lender’s share price had been “a source of disappointment” for shareholders, flagging the substantial changes over the past year, which have resulted in significant downward pressure on the valuations of fintechs and non-bank consumer lenders in particular. He said that the planned repayment of its corporate debt and closure of a strategic capital raise should “relieve the uncertainty impacting [its] share price”.

“Our focus on strengthening the balance sheet, optimising our funding structures, and driving profitability will contribute to a stronger foundation for future growth — and we are confident that this will ultimately translate into increased shareholder value over time,” he said.

MONEYME executes $150m term securitisation

At the EGM, shareholders voted in favour of a $37 million placement to proceed with the planned paydown of its corporate debt facility (using approximately $32 million), which the lender’s CEO said would “deliver improved terms on the facility, reducing the interest rate by 200 bps per annum, and delivering annualised cost savings of $6–$8 million.

“The significant reduction in MONEYME’s interest costs will support our profitability in FY24 and beyond,” he said.

“It will create significantly more headroom against financial covenants and allow for loan book growth.”

MONEYME has also this week priced a new term securitisation.

The SocietyOne PL 2023-1 Trust term securitisation, due to settle on 19 May 2023, comprises both secured and unsecured personal loan assets from two SocietyOne warehouses.

Mr Howes said: “We are pleased to announce MONEYME’s first securitisation deal for SocietyOne assets following our acquisition in 2022.

“This term transaction effectively solves for the SocietyOne Funding Trust 1 warehouse prior to its expiry.

“It’s great to see our securitisation funding platform operate and deliver a third-term transaction for the group to further facilitate profitable returns and stability in the current challenging economic environment.”

The CEO suggested the successful deal demonstrated MONEYME’s capital markets capabilities and “strong funding position”.

“As we continue to execute our strategy, we remain focused on profitable growth, maintaining and further enhancing the quality of our loan book, and leveraging the efficiency and accuracy of our AI-driven credit decisioning,” he said.

National Australia Bank was lead arranger while NAB and Westpac Institutional Bank were lead managers.

[Related: MONEYME delivers ‘record’ NPAT]