Surging prime flows have reshaped Pepper Money’s loan book, powering record growth.
Non-bank lender Pepper Money – a major player in residential, commercial, and asset finance across Australia and New Zealand – has capped 2025 with record originations and assets under management.
Prime surge transforms mortgage mix
For the financial year ending 31 December 2025, Pepper Money’s total originations climbed 47 per cent to $10.3 billion, up from $7 billion the year before, while applications rose to $16.4 billion.
Mortgages drove much of the uplift, with new residential and commercial mortgage originations jumping 66 per cent to $6.8 billion, while asset finance settlements grew 20 per cent to $3.5 billion.
Within mortgages, the story of the year was prime.
Prime originations surged to $4.9 billion, from $2 billion in FY24 – an increase of 148 per cent – while near prime fell to $1.7 billion (from $1.9 billion, down 11 per cent).
In the core mortgage segment, Pepper recorded $4.6 billion of prime settlements alone, up 161 per cent on the prior year.
The shift was also visible in the balance sheet with mortgage assets under management (AUM) sitting at $10.2 billion at 31 December 2025, with prime loans making up $5.5 billion (up 18 per cent from $4.7 billion).
Speaking to The Adviser, Pepper Money CEO Mario Rehayem stressed that the lender’s prime volume was firmly aligned with the group’s non-bank heritage.
“When you appreciate the type of products that we have, prime is not your typical prime,” he said.
“For us, prime still represents what you would call a vertical slice of what we call non-bank prime, which is heavily tilted and focused on self-employed borrowers.”
He said this cohort often arrived at Pepper after hitting roadblocks elsewhere.
“These particular customers, the majority of them actually have either been turned down by the banks or didn’t find a product or feature in the products that suited their needs,” he said.
“They are prime by way of credit profile, but they are looking for features or certain elements that we offer, whether it be alternative documentation, investment lending or otherwise in our prime, that allows them then to go for that non-bank option.”
Broker flows and white label lead the way
Pepper’s FY25 numbers also underlined the central role of brokers.
Of the $6.8 billion in mortgage originations, $3.1 billion came through Pepper’s retail channel (up from $2 billion, a 58 per cent rise), $3.5 billion via white label offerings (up from $2 billion, an increase of 77 per cent), and $0.2 billion via direct channels (up 24 per cent).
That translated to a mortgage channel mix of 46 per cent retail, 51 per cent white label, and just 3 per cent direct for the year.
Across the broader business, Rehayem said the overwhelming majority of all originated loans now came from mortgage brokers.
“So around 95 per cent of all originated loans come from mortgage brokers,” he said.
“We started this business 26 years ago as a broker only style offering. So the business continues to constantly look for ways to service the mortgage broker, third party distribution network.”
Rehayem said Pepper was agnostic as to whether flows came through retail or white label.
“For us, as long as we can deliver our services to the market in any kind of brand, that doesn’t worry us at all. Every product, every process that we produce, has always got the customer in mind and the broker in mind,” he said.
He added that this approach – coupled with a focus on experience and post-settlement care – had been a key driver of growth.
“We are definitely aligned with the best interests of the customer, but also being very much focused on the process and the ability to engage seamlessly with our brokers,” he said.
SMSF growth and asset finance
Pepper’s mortgage numbers were boosted by the continued success of its self-managed super fund (SMSF) mortgage product, launched in the second half of 2023.
SMSF originations grew 106 per cent on the prior year and contributed around 7 per cent of total mortgage segment originations in FY25.
Rehayem said the SMSF result highlighted how quality product design and process were successfully landing with the market.
“What that is really indicating is that our product has features, benefits and our process has those features and benefits that brokers gravitate to because they’re putting their customer in good hands,” he said.
“We will continue to evolve that particular product and all our products, really, to ensure that they remain competitive and relevant to the market conditions.”
Asset finance and credit performance
On the asset finance side, Pepper delivered another year of double-digit growth, with asset finance originations climbing to $3.5 billion from $2.9 billion, with consumer and commercial assets sitting at $900 million and novated leases at $1.7 billion.
Distribution again skewed heavily to intermediaries and specialist partners.
Novated lease companies accounted for 47 per cent of flows, while commercial brokers brought in 19 per cent and auto brokers contributed 13 per cent.
Credit quality remained broadly stable in both portfolios, despite persistent cost-of-living pressures.
Rehayem acknowledged that asset finance customers were feeling more pressure than mortgage borrowers, but said the overall position remained solid.
Net interest margin improved as funding conditions eased, with total NIM rising 10 basis points to 2.05 per cent.
Rising profits and 2026 outlook
Pepper closed the year with record total AUM of $21.8 billion, up 14 per cent on the previous corresponding period.
Statutory full-year NPAT rose to $104.6 million, up from $98.2 million in FY24 – a 7 per cent increase.
Pepper said mortgage customers had remained resilient through 2025, even as some asset finance borrowers experienced more strain, adding that it was well-positioned to pursue growth through new products and partnerships.
Rehayem flagged a strong pipeline of product changes, policy tweaks, and new launches, as well as a significant program of digital and AI enhancements.
“The business is only as good as its people, its products and its processes at the end of the day,” he said.
“Our ability to be able to generate $10.3 billion of new originations and have a record $21.8 billion in assets under management is a testament to the people of the business, but also the design of our products, our processes are playing a very big key here.”
The results come after Challenger Limited made an offer on 9 February to jointly acquire the listed non-bank lender alongside Pepper Group ANZ HoldCo Limited (Pepper Group), with Pepper confirming that “discussions are ongoing”.
[Related: Challenger makes bid for Pepper Money]
