Prospa reports 27% drop in originations

Additionally, Prospa also recorded a decline in closing gross loans in December 2023, down 5.6 per cent from 1H FY23 to $807.4 million from $855.8 million, and 6.4 per cent on the previous half ($862.2 million).

The lender’s originations in New Zealand also suffered a fall of 32 per cent on the previous corresponding period, ended the year on $63 million, down from $93.1 million.

Prospa has attributed the decline in originations to its ongoing deliberate tightening of credit settings, with its co-founder and chief executive Greg Moshal referring to the half-year results as “mixed”.

“However, Prospa’s proactive steps to credit management have helped us navigate a challenging economic environment. We have also continued to deliver on our product and technology roadmap, with all new products now originating on our new platform,” Mr Moshal said.

“We’re pleased to acquire Zip Business’s Australian performing loan book, which exemplifies our ability to execute on opportunities that further unleash the potential of small business.”

Speaking to The Adviser, Prospa's chief revenue officer and co-founder, Beau Bertoli said the majority of the lender's applications came through its network of over 15,000 brokers across Australia and New Zealand.

"They are essential to our continued success, and we remain focused on working with our trusted brokers and partners to deliver competitive, tailored, and appropriate solutions to small businesses.”

Mr Bertoli added: “During H1, we introduced our new pricing matrix, which is already showing encouraging results, furthering our efforts to help brokers connect their SME clients with the funding they need and win more business."

"Our continued investment in our product and technology roadmap has also enabled our recent acquisition of Zip Business's Australian performing loan book and demonstrates our ability to execute on opportunities that help unleash the potential of small businesses.

"We’re confident we’re on the right path for sustainable growth for us and our partners, and are excited for the year ahead," he said.

Zip Business acquisition

Indeed, the SME lender recently announced that it had entered into an agreement to acquire the loan portfolio of Zip Business following its cessation of operations in 2023.

The acquisition was valued at around $15.6 million with funding coming from Prospa’s existing warehouse funding arrangements.

The acquisition included all of Zip Business’ remaining performing business loans which was reportedly held by 370 small business, equivalent to approximately $18.4 million of commercial loans.

Mr Moshal commented at the time that the acquisition reflected Prospa’s “continued commitment to support Australian small businesses with tailored finance for their needs”.

Outlook

The lender stated in its trading update that while economic outlook across Australia and New Zealand remains uncertain, early loss indicators have reduced since their peak from mid-CY22 originations cohorts.

“We continue to monitor our customer base for risks and opportunities, as demonstrated by the purchase of the Zip Business loans,” it said.

“Our recently revamped premium customer offering is being well received by customers and partners alike. We remain committed to supporting our customers and partners and increasing shareholder value.”

[RELATED: Prospa acquires SME loan portfolio for $15.6m]