Pepper Money Ltd · ASX:PPM
Pepper Money — 1H 2024 Earnings Presentation
28 slides from Pepper Money's earnings presentation, Aug 29, 2024
Slide 1: 2024 Half Year Results
Investor Presentation 2024 Half Year Results 29 August 2024
Slide 2: Today's Presenters
PEPPER MONEY Today’s Presenters Joined Pepper Money in 2011, and Joined Pepper Money in 2018 Mario Rehayem appointed CEO of Pepper Money in 2017 Therese McGrath Chief Executive Chief Financial Officer Over 20 years of experience across Officer 25+ years of international experience banking and financ
Slide 3: 1H 2024 Highlights
PEPPER MONEY We help 1H 2024 Highlights Our Mission people succeed Our Values New Customers Originations Total AUM³ Net Interest Margin⁴ Credit Quality Disciplined growth Profitability Interim Dividend Loan Loss⁵ % AUM Expenses⁶ Pro-forma NPAT⁷ Fully franked 37,357 $3.3bn $19.3bn 1.92% 0.45% 2% $46.
Slide 4: Mortgages | 1H 2024
BUSINESS UPDATE Mortgages | 1H 2024 Volume Income Credit Quality Originations by Product ($bn) Weighted Interest Rates¹ (%) Loan Loss Provision ($m) 2.2 41.1 1.8 1.7 0.1 30.3 31.5 +6% PCP 13.0 0.1 8.0 8.0 0.1 1H 2023 2H 2023 1H 2024 5.0 1.2 3.0 1.0 1.0 +20% 23.1 1.2 21.1 20.5 0.8 0.7 (1)% Prime
Slide 5: Asset Finance | 1H 2024
BUSINESS UPDATE Asset Finance | 1H 2024 Volume Income Credit Quality Originations by Product ($bn) Weighted Interest Rates¹ (%) Loan Loss Provision ($m) 1.8 89.3 89.3 89.3 1.6 (19)% PCP 0.4 1.4 2.8 0.7 2.0 0.6 +56% 1H2023 2H2023 1H2024 35.4 37.5 42.1 0.7 0.8 0.5 (52)% 51.1 51.1 45.2 0.4 Tier A 8
Slide 6: Loan & Other Servicing | 1H 2024
BUSINESS UPDATE Whole Loan Sales Broker Administration transfers AUM from the Servicing exited Loan & Other Servicing | 1H 2024 Lending segments to Loan Servicing segment Q3 2023 Loan Servicing AUM (Closing) ($bn) +149% +61% 2.3 1.4 0.9 Origination Sources Benefits Pepper Money Treasury whole loan C
Slide 7: Funding
BUSINESS UPDATE Warehouses Securitisation Whole Loan Sales / Private Term issuances Funding A$9.2bn³ 19 4 Public Platforms⁴ A$43.0bn⁵ total capacity facilities (PRS, Pepper Prime, Total Issuance A$9.8bn+ Performance 23 funders (includes 3 major Capacity down (2)% Sparkz, Pepper Social) total funding
Slide 8: Pro-forma Financial Performance
FINANCIALS Pro-forma Financial Performance Volume Income Expenses / FTE Profit Originations ($bn) Net Interest Margin¹ (%) Total Expenses ($m) Profit pre-Provisions⁴ ($m) +2% +13% (7)% 2.62% (3)% 2.39% 2.52% +12% (14)% 1.92% 1.81% 1.92% 122.4 115.7 119.6 11.7 13.8 3.8 13.1 3.5 3.3 1.60% 11.9 10.0 9.
Slide 9: NIM Movement
Jun 2024 FINANCIALS Total Exit NIM⁴ NIM Movement (11bps) +11bps 1.98% NIM compression is moderating. NIM improved 0.61% (0.56%) over 1H 2024 with pricing initiatives and product (0.16%) 0.34% (0.26%) 0.03% mix supporting higher customer rates. Coupled with improved funding margins, the increase in 1
Slide 10: Credit Performance | Provision Coverage
FINANCIALS Collective Provisions Credit Performance | Provision Coverage MORTGAGES Reduction in Collective Provisions reflect the reduction in the loan portfolio (AUM) Specific Provisions Remain relatively stable. 90+ days arrears remain in line with long term average Post Model Overlay Movement in
Slide 11: Credit Performance | Loan Loss Expense
FINANCIALS Mortgages 90+ day arrears¹ ² as % of AUM Credit Performance | Loan Loss Expense 1.53% 1.48% 1.27% 1.30% 1.16% 1.14% Half Year Ending 0.99% 0.88% 0.86% Loan loss expense $ Million Jun 2024 Dec 2023 Jun 2023 Mortgages Specific (3.2) (0.4) (2.0) Collective: base 0.4 2.1 (0.5) Post-model over
Slide 12: Pro-forma Expenses
FINANCIALS FTE Movement Pro-forma¹ Expenses # 26% 7% 1,082 Online and Broker Servicing Core Manila 316 863 805 Core ANZ 126 112 263 256 244 Core Lending 766 737 693 503 481 449 Jun 2023 Dec 2023 Jun 2024 Half Year $ Million 1H 2024 2H 2023 1H 2023 Employee benefits expense (65.3) (63.6) (65.0) Core
Slide 13: Pro-forma Profit & Loss
Half Year % 1H 2024 vs FINANCIALS $ Million 1H 2024 2H 2023 1H 2023 2H 2023 1H 2023 Pro-forma Interest income 732.4 738.0 664.3 (1)% 10% Profit & Interest expense (561.5) (559.7) (479.4) (0)% (17)% Loss Net interest income Lending fee income 170.9 33.4 178.3 35.2 184.9 37.0 (4)% (5)% (8)% (10)% Lend
Slide 14: Pro-forma Metrics
Half Year % 1H 2024 vs FINANCIALS 1H 2024 2H 2023 1H 2023 2H 2023 1H 2023 Pro-forma Volume ($ Billion) Metrics Originations – Mortgages Originations – Asset Finance 1.8 1.4 2.2 1.6 1.7 1.8 (17)% (8)% 6% (19)% Total Originations 3.3 3.8 3.5 (14)% (7)% AUM lending – Mortgages 11.3 12.6 12.4 (10)% (9%)
Slide 15: Sources and Uses of Cash
FINANCIALS 1H 2024 $ Million Sources and Uses of Cash Trust income 146.3 Corporate Cash Flow Origination fees 42.6 WLS premium 33.0 Key Movement: 31 December 2023 to 30 June 2024 Servicing and other income 2.7 INFLOW Trust Income Total Income 224.6 Interest income derived from assets under managemen
Slide 16: Balance Sheet
FINANCIALS $ Million Balance as at 30 Jun 2024 31 Dec 2023 30 Jun 2023 Balance Sheet Cash and cash equivalents 1,106.3 1,528.7 1,110.6 Statutory Receivables 15.7 21.2 15.5 Loans and advances 17,120.5 18,379.4 18,129.3 Derivative financial assets 64.6 52.4 140.9 Key Movement: Other financial assets 1
Slide 17: PPS: connecting brokers to solutions
PEPPER MONEY PPS: connecting brokers – Scaled technology supports customers to solutions on-going efficient growth PEPPER PRODUCT SELECTOR Online enquiry 14 - 25 questions PPS 24.9% PPS Contribution (PPS Settlements % over time) Settlement¹ volume through PPS as lead Under 2 minutes 35% 27,611 30% R
Slide 18: Outlook
PEPPER MONEY Outlook External Funding Inflation is Consumer and Market growth factors markets – trending business will return – stabilising towards the confidence low helped by stable target, remains – starting to / reducing Pepper Money has sticky improve interest rates successfully navigated the d
Slide 19: Questions & Answers
Questions & Answers
Slide 20: Thank you
Thank you on behalf of all of Pepper Money Pepper Money Limited ABN 55 094 317 665. Australian Finance Services Licence 286655; Australian Credit Licence 286655 Pepper Asset Finance Pty Limited ACN 165 183 317; Australian Credit Licence 458899 © Copyright Pepper Money Limited. All rights reserved.
Slide 21: Appendices
Appendices
Slide 22: Pepper Money over time
APPENDIX: HISTORY Pepper Money over time Funding No. Customers Originations Total AUM Loan performance $40bn1 492,605 $ 61bn3 $ 19bn4 0.5% across 63 transactions from customers helped to June 2024² in loans originated from 2000 Assets Under Management as Cumulative loss⁵ 2003 to June 2024 to June 20
Slide 23: Addressable Market
APPENDIX: MARKET Addressable Market June 2024 Mortgages Asset Finance $2,645bn $237bn Total Addressable ¹ Market (AUM) Conforming: 88% Consumer: $69bn⁴ Non-Conforming: 12%2 Commercial: $168bn⁵ ~0.4% ~2.4% Pepper Money’s ³ ⁶ Market Share (closing AUM) Consumer: ~2.9% Commercial: ~2.2% Targeted • Firs
Slide 24: Operating Income Change in accounting treatment
APPENDIX: FINANCIALS Commencement of loan Life of loan Operating Income Net interest Driven by AUM, net interest margin Change in accounting income Interest revenue received from customers Mortgage Risk Fees / Loan Protection Fees received from customers treatment where LVR exceeds certain threshold
Slide 25: Glossary & Disclaimer
Glossary & Disclaimer
Slide 26: Glossary of Terms
PEPPER MONEY Glossary of Terms AUM – lending (closing): assets under management Employee benefits expense/Total operating income: Pro forma NPAT: Pro-forma pre-tax adjustments for 1H originated and serviced (securitised and Pepper Money employee benefits expenses divided by total operating CY2024 $N
Slide 27: Disclaimer
PEPPER MONEY Disclaimer Summary information This Presentation contains summary information about Pepper Money Limited (ACN 094 317 665) (Pepper Money) and Certain figures, amounts, percentages, estimates, calculations of value and fractions provided in this Presentation are its activities and is cur
Slide 28: For more information visit www.peppermoney.com.au
Investor Relations Reunion Capital Partners Gordon Livingstone M +61 (0) 417 695 138 E glivingstone@reunioncapital.com.au For more information visit Media Relations www.peppermoney.com.au Sodali & Co Helen Karlis M +61 (0) 419 593 348 E helen.karlis@sodali.com Pepper Money Limited ABN 55 094 317 665