Buy now, pay later group humm has seen a leap in profit from its SME lending division, with plans to keep the momentum rolling via the broker channel.
Humm, formerly known as FlexiGroup, posted its 2021 financial year results on Thursday, revealing its profit had more than doubled from FY20. Cash net profit after tax (NPAT) for the group was up by 121 per cent on the year before, to $64.8 million.
While its earnings had mostly been driven by its buy now, pay later (BNPL) offerings, humm also derived growth from its SME lending arm, flexicommercial.
Commercial and leasing volumes were up by 55.6 per cent in flexicommerical, to $540.3 million, while cash NPAT had more than quadrupled, up by 431 per cent to $22.3 million.
Operating income for flexicommerical had also grown by 50.6 pent from FY20, to $50.5 million.
The business had shifted to focusing on small to medium enterprises (SME) lending and distributing through the broker channel, when it rebranded and consolidated a number of its commercial and leasing businesses.
Rebecca James, chief executive of hummgroup, credited the company’s growth with an investment in a new fraud and credit decisioning engine, that reportedly reduced the group’s net loss position.
In the flexicommercial business, there had been an 88 per cent plunge ($3.1 million) in impairment losses, down to $4.2 million – as well as a partial release of a COVID-19 provision.
Ms James also tipped humm would be boosting its investment in flexicommerical’s interactions with brokers, after it completed a strategic review into the business.
“Given the strong business momentum and favourable market conditions, the company has decided to invest and grow the flexicommerical broker channel, which has been a standout performer this year,” she said.
Humm is also looking to expand into the consumer markets in UK and Canada later in FY22, after it recently partnered with Westpac New Zealand for the Kiwi distribution of its BNPL product, bundll.
Further, the fintech has teamed with Mastercard, Virgin loyalty program Velocity Frequent Flyer and retailers such as Mitre 10.
Partnerships are expected to be a significant contributor to customer numbers, with humm setting a target to add 250,000 customers within the 2022 financial year.
Rival BNPL provider Zip recently decided to rebrand its SME lender arm to Zip Business, unifying its business offering across markets.
CBA also took on the segment earlier this week, rolling out its own BNPL product on Wednesday – despite past comments from CEO Matt Comyn suggesting the sector should face similar regulation to other lenders.
Notably, an executive from Zip recently accused banks of anticompetitive behaviour, saying they had told customers they would need to drop their accounts with BNPL providers in order to secure a mortgage.
[Related: COVID SME grants extended to multiple states]