Brokers help deliver record half for Pepper

The figure is up 53 per cent on the prior comparative period (pcp) and is its highest-ever recorded origination figure for a six-month period.

Mortgage originations were up 48 per cent to $4.1 billion in the half, taking Pepper Money’s assets under management to $14 billion at the end of June 2022 (up 24 per cent).

The non-bank lender saw more than half of its mortgage originations come from “prime” customers, with near prime making up 40 per cent of home loan originations and just 5 per cent being specialist.

Moreover, less than a third of mortgage borrowers in the half were self-employed, with the majority being PAYG (or other) customers.

Credit quality also improved by 10 bps during the year to 30 June.

As well as mortgage growth, the non-bank revealed that asset finance originations had also accelerated, up 67 per cent on pcp at $1.5 billion.

Assets under management for the asset finance arm grew 43 per cent to $4.3 billion in the first half of 2022.

According to its results, 35 per cent of its asset finance business came from commercial brokers in the first six months of the calendar year, with 21 per cent from mortgage brokers and 19 per cent from auto brokers.

The lender had acquired a majority stake in Stratton Finance earlier this year, which had also bolstered the asset finance business.

Writing in a LinkedIn post following the release of the results, Pepper Money chief executive Mario Rehayem noted the contribution of the third-party channel.

He said: “I want to take this opportunity to thank our valued mortgage and auto brokers, white label partners, aggregators, and our people for the role you have played in delivering this record-breaking six-month performance. 

“Without your support we wouldn’t have the privilege of delivering great products, processes, and policies. Importantly, we wouldn’t be able to achieve outstanding results for our business, and for our customers, without you.”

Looking forward, Mr Rehayem said he believed the lender was in a strong position – and was set to continue raising funds via the securitisation markets – but noted that demand for mortgages had dropped following the increases to the official cash rate.

Overall, Pepper Money reported a statutory net profit after tax of $72.2 million for the six months ended 30 June 2022, up 29 per cent on prior comparable period.

Adjusting for one-time expenses relating to the acquisition of Stratton Finance Pty Limited in CY2022, and IPO and related items in CY2021, pro-forma NPAT was up 11 per cent to $73.1 million.

Mr Rehayem, said: “Our strong 1H CY2022 financial performance is testament to the resilience of our business, the diversity of our income streams, and our ability to respond to cycles and deliver attractive returns.

“We entered CY2022 prepared for volatile market conditions with expectations of interest rate increases, macroeconomic and geopolitical uncertainty, and funding constraints. Against this backdrop we accelerated opportunities to grow our loan books and delivered record originations of $5.6 billion in the half year ended 30 June 2022, up 53 per cent on PCP. 

“We have continued to grow well ahead of system, with our Mortgage portfolio growing 4.0 times and Asset Finance growing 21.5 times systems versus second half 2021.

“With our total Assets Under Management at a record $19.4 billion as at 30 June 2022 and the strength of the income earned from AUM, we are well positioned to navigate the current challenging market conditions.”

[Related: Pepper to take majority stake in Stratton Finance]