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Brokers drive 77% surge in originations for online lender

by Francesca Krakue10 minute read
The Adviser

An ASX-listed, online marketplace lender has more than doubled its revenue since last year, with 50% of loan originations coming from the broker channel.

In a trading update on Wednesday, DirectMoney announced it generated revenue of $1.2 million during the financial year to 30 June 2016, an increase of 171 per cent compared to the prior corresponding period.

The group said it engaged with approximately 9,500 unsecured personal loan applicants during the year and wrote $11.2 million of new unsecured personal loans.

Chief executive Peter Beaumont explained that the increase in revenue is linked largely to an increase in the group’s loan volume which grew by 77 per cent.

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“Of that loan volume, 50 per cent came from the broker channel which continues to be an important part of our business strategy,” Mr Beaumont told The Adviser.

Mr Beaumont elaborated that the growth in loan originations reflects the work the group has done with the broker channel.

“We have some 500+ accredited brokers and we have access to somewhere around 5,000 brokers with the aggregators we have arrangement with,” he said.

“In this coming year we’ll be spending a lot of time working with brokers to increase the number of accredited brokers and to potentially bring on more aggregators.”

“We welcome working with brokers as they are an effective filter for us and improve our credit quality overall, and reduces some of our origination costs as well,” he added.

Mr Beaumont also commented that increasingly the group is finding brokers are looking to broaden the products that they are familiar with and able to sell.

“Increasingly, mortgage broker groups and asset finance groups are endeavouring to broaden the skill base of their brokers which leads them to have needs to be able to self-source personal loans, which means companies like DirectMoney become useful for them.”

DirectMoney accelerates partnerships

Earlier this year, DirectMoney inked a loan referral agreement with MyState Bank.

A non-exclusive for both parties, it allows the online lender to potentially offer its direct channel personal loan applicants with an alternative financing option.

In February the company sold a $5 million loan portfolio to Macquarie Bank Limited which provided DirectMoney with funds for additional lending and crystallised revenues from loan establishment fees and broker fees included in the loan principal amounts.

“We are currently in discussions with a number of institutional parties around establishing larger funding facilities,” Mr Beaumont explained to Mortgage Business.

“We’re also accelerating the marketing of our DirectMoney personal loan fund, which is a structure that allows retail and wholesale investors to invest in our loans and increasingly that is going to be an important source of funding for our business,” he said.

The group said its vision is to grow to having more than $500 million of loan assets under management.

[Related: DirectMoney on aggressive growth path via broker channel]

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