A diversified lending approach has underpinned the growth of one of Australia’s leading non-bank lenders.
Announcing the group’s first profit result since listing on the ASX on 31 July, Pepper co-group chief executive Patrick Tuttle said on Wednesday that the company’s Australian residential lending volumes are slightly ahead of expectation on a year-to-date basis.
“Underpinning this growth is our increasing penetration of national broker networks, further white-label partnerships and the continuing emergence of our direct-to-consumer channel,” Mr Tuttle said.
“Due to ongoing promotion and investment, we anticipate a higher proportion of direct business going forward, further strengthening our mortgage distribution footprint.”
In a trading update this week Pepper said that its direct-to-consumer campaign in Australia includes the launch of its new customer-focused website.
The specialist lender posted a statutory net profit after tax (NPAT) of $3.8 million for the six months to 30 June. Adjusted NPAT was $16.7 million and in line with the group’s expectations.
Pepper reported pro forma total income of $132.6 million and statutory income of $225.3 million.
The group recorded higher origination volumes for the second half of the year in its South Korean mortgage and personal loan businesses. Meanwhile, Pepper’s Spain-based point-of-sale finance and personal loan business, together with its asset finance portfolio, saw continued growth in the six months to 30 June.
Pepper Co-Group CEO Mike Culhane said the results were a reflection of the stable, diversified platform management has built to facilitate growth both locally and abroad.
“Pepper’s half-year result is slightly ahead of expectations and in line with our forecasts for the calendar year 2015,” Mr Culhane said.
“The business continues to grow strongly across its core business lines including residential mortgages, consumer lending and loan servicing.
“Management has confidence in the continued strong performance of the business into the second half and beyond. Recurring revenue streams on our existing lending and servicing portfolios give us confidence in our earnings visibility going forward.”
During the first half of the 2015 financial year Pepper on-boarded a series of new servicing contracts in Ireland, Spain and the UK, some of which had originally been awarded late last year. This has resulted in a substantial increase in servicing assets under management (AUM) from 2014 to the first half of 2015.
Pepper Ireland was awarded a contract after 30 June to provide third-party asset servicing on a $5.6 billion loan portfolio recently acquired by CarVal Investors and Goldman Sachs affiliated entities from Lloyds Banking Group. The portfolio comprises a mix of residential, commercial and unsecured loans.
Pepper noted that the contract will be earnings accretive from 2016.
[Related: Pepper extends product offerings]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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