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New originations rise by 17% at Pepper

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Reporter 5 minute read

Specialist lender Pepper has reported that, as it continues to focus on brokers, its Australian mortgage business saw originations rise to $1.38 billion in the first half of the year.

Speaking to The Adviser, Pepper Group CEO Mike Culhane said that around 50 per cent of new business came through the broker channel, with 42 per cent being white label and the remaining 8 per cent being direct.

However, Pepper said that, while some of the growth was due to banks tightening up on their lending policies, it believed that the main reason for the volume growth was increased awareness around “Pepper’s distinct offering”.

Mr Culhane told The Adviser: “We did a workshop around the country about eight weeks ago and that had record turnouts. And there is often a very strong correlation between them and lending growth.”


He continued: “But there is no one massive driver for the increase. One thing we have been super focused on, and have been for the last couple of years, is ensuring that we work to increase the number of brokers we have in Australia. If you’re successful in doing that, which is a long-term programme, and you get those brokers moving from just one application a year to two, then obviously you can increase your volume significantly.”

According to Mr Culhane, while the specialist products were still the source of business, Pepper saw a “pick-up” in its prime originations in the six months to 30 June 2017.

“We’re trying to offer the whole product set to brokers, so it’s just easy for them to use us. So, our view of the world is [that] if we have a competitively priced prime product alongside our specialist products, then we are getting out in front of more eyes and being able to give more to more people. It’s very much a companion product to our core specialist range.”

Looking at Pepper’s Australian home loans, 90-day+ arrears increased slightly from 1.36 per cent in the first quarter of the year to 1.55 as at 30 June 2017. However, this figure dropped back to 1.41 per cent in July 2017. Pepper has said that its low arrears are due to the group’s “disciplined credit exposure as well as low interest rates”.

The six-month results also revealed that the diversified financial services firm as a whole had a 20 per cent rise in adjusted net profit after tax (NPAT) to $28.3 million.


Total income for the half rose 13 per cent from $139.9 million on the prior comparative period to $219.4 million, but profits are expected to be weighted towards the second half of the year.

Loan originations across the group reached $2.8 billion, with the lion’s share (more than $2.4 billion) coming from Australian mortgages and consumer finance in South Korea.

The lender is currently in the midst of a takeover deal, subject to shareholder approval, which — if approved — could see the company de-list from the ASX and become privately owned once more.

[Related: Pepper accepts $675m takeover deal]

New originations rise by 17% at Pepper
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