Pepper Money Ltd · ASX:PPM
Pepper Money — H1 2022 Earnings Presentation
31 slides from Pepper Money's earnings presentation, Aug 24, 2022
Slide 1: Pepper Money Limited Investor Presentation First Half CY2022
For personal use only Pepper Money Limited Investor Presentation First Half CY2022 24 August 2022 1
Slide 2: Today's Presenters
PEPPER MONEY Today’s Presenters For personal use only Mario Rehayem Chief Executive Officer Joined Pepper Money in 2011, and appointed CEO of Pepper Money in 2017 Over 20 years experience across banking and finance Previously held senior positions in APRA regulated entities and the non bank sector,
Slide 3: 1H CY2022 Highlights
1H CY2022 Record results Credit quality Pro-forma NPAT Funding – supporting Highlights Total AUM growth $19.4bn 0.18% $73.1m Four term issuances For personal use only $2.5bn Pepper Money is one of Australia and New Zealand’s largest non-bank lenders Loan Losses % AUM³ 11% PCP 24% PCP and our mission
Slide 4: Growing faster than the market
June 2022 Mortgages Asset Finance BUSINESS UPDATE Growing faster than the market $2,601bn $2,421bn ¹ $180bn Total Addressable Conforming: 88% Consumer: $60bn³ For personal use only Market (AUM) Non-Conforming: 12%² Commercial: $120bn⁴ Mortgages⁵ AUM Walk Asset Finance AUM Walk Closing AUM (A$bn) Clo
Slide 5: Customer Solutions – Mortgages
1H CY2022 Originations by Distribution channel² BUSINESS UPDATE Direct Customer Solutions – Mortgages 4% For personal use only Complex made simple... average time to solution 6.8 hours¹ 1 2 3 44% 52% Retail White Label Prime Near Specialist Prime Customer Single Application Product Selection Custome
Slide 6: Customer Solutions – Asset Finance
1H CY2022 originations by Channel¹ BUSINESS UPDATE Partnerships Novated Customer Solutions – Asset Finance Lease 3% Auto Broker Mortgage 7% 19% For personal use only Broker Automated approval within seconds 21% 1 2 3 35% Commercial 15% Broker Dealer Customer Journey Application from any device Appro
Slide 7: Funding
BUSINESS UPDATE Warehouses Securitisation Whole loan sales / private term issuances Funding A$11.0bn total capacity 14 facilities 4 Public Platforms³ A$33.6bn⁵ A$6.0bn+ performance (PRS, Pepper Prime, Total Issuance total funding For personal use only 19 funders Capacity up 11% Sparkz, Pepper Social
Slide 8: Technology delivering scale & efficiency
BUSINESS UPDATE Core Productivity¹ Technology delivering scale & efficiency +65% on LTM For personal use only Volume through SOLANA Hit 100% in March Operations 100% 2022. 1H 2022 Pepper Apollo – service task automation ASSET FINANCE 80% Auto-approval pass 60% rate at 42%, expected to reach 40% 60%
Slide 9: Lending growth
BUSINESS UPDATE Pepper Money has continued to Lending growth deliver strong growth over 1H CY2022 For personal use only Total Lending Applications¹ ² ($bn) Originations² ($bn) AUM² ($bn) Half Year Half Year Half Year 1.8 $5.6bn 20.0 1.2 $18.3bn 1.6 $8.4bn 18.0 1.0 1.4 $3.7bn 16.0 $14.3bn 1.2 0.8 14.
Slide 10: Financial performance
FINANCIALS Financial performance For personal use only Pro forma Volume Income Expenses / FTE Profit Originations ($bn) Net Interest¹ ($m) Operating Expenses ($m) Pro-forma EBITDA ($m) +53% 3.37% 3.43% 3.07% 43.4% 44.2% +11% 43.3% 50.0% 5.6 2.59% 2.52% 2.29% 40.0% 4.8 2.40% 2.28% 2.06% (13)% 30.0% 3
Slide 11: NIM movement
June 2022 Exit FINANCIALS NIM Total 2.17% NIM movement (7bps) (23bps) For personal use only (0.33%) 0.25% (0.17%) 0.01% (0.24%) Recent price Funding margin gains 0.18% movements will flow mostly absorbed through 2H CY2022 impacts of customer 2.59% 2.52% 2.29% rate deterioration 1H CY2021 Customer BB
Slide 12: Front and back book rate rises
FINANCIALS Front and back book rate rises Back book Front book For personal use only Mortgages¹ Prime Yield² Near Prime Yield² 8.0% 8.0% 7.0% 7.0% 6.0% 6.0% 4.93% 4.89% 4.82% 4.72% 4.88% 5.0% 4.52% 4.64% 4.54% 4.50% 4.53% 4.50% 5.0% 4.40% 3.66% 3.79% 3.55% 3.44% 3.41% 3.36% 3.37% 4.0% 3.68% 3.59% 3.
Slide 13: Loan loss expense & provision
FINANCIALS Total Provisions ($M) 110.6 110.9 114.2 Loan loss expense & provision 18.0 31.7 24.7 For personal use only 68.7 67.6 Overlay 60.5 Total loan loss provision as at 30 June 2022 of $114.2 million increased from $110.9 million in December 2021 – maintaining strong coverage in changing Collect
Slide 14: Pro-forma expenses
FINANCIALS FTE growth in Manila Shared Services was the primary driver of increased Employee benefits and Technology expense. Normalising for the write down Pro-forma expenses of an equity investments Total Expenses are only 1.2% higher than 2H 2021. For personal use only Half Year Ending FTEs Jun 2
Slide 15: Pro-forma key metrics
Half Year Ending FINANCIALS Jun 2022 v Jun 2022 v Jun 2022 Dec 2021 Jun 2021 Dec 2021 B/(W) Jun 2021 B/(W) Pro-forma Volume ($ billion) Metrics Originations – Mortgages 4.1 3.6 2.8 14.5% 48.4% For personal use only Originations – Asset Finance 1.5 1.2 0.9 27.4% 67.2% Total Originations 5.6 4.8 3.7 1
Slide 16: Pro-forma income statement
FINANCIALS Half Year Ending Pro-forma $ million Jun 2022 Dec 2021 Jun 2021 Jun 2022 v Dec 2021 B/(W) Jun 2022 v Jun 2021 B/(W) Income Interest income 376.5 351.4 338.9 7.1% 11.1% For personal use only Interest expense (184.0) (161.0) (162.7) (14.3%) (13.1%) Statement Net interest income from continu
Slide 17: Balance Sheet
FINANCIALS Balance Sheet For personal use only Jun 2022 Dec 2021 Jun 2021 Statutory Balance as at $M $M $M Assets Cash and cash equivalents 1,265.9 1,309.2 836.7 Key Movement: June 2022 on December 2021 Receivables 10.1 9.4 19.2 Loans and advances 18,384.1 15,819.8 14,339.7 Loan and advances Derivat
Slide 18: Stratton fast start to integration
BUSINESS UPDATE Stratton completed 1 July 2022. Since then strong progress made on business integration. Revenue and cost synergies have commenced with value realisation Stratton fast start to integration from Q4 CY2022. Stratton will be consolidated under the Asset Finance segment from 2H 2022. For
Slide 19: Adapting to ever changing market conditions
PEPPER MONEY Adapting to ever changing market conditions For personal use only What we have done to date Our focus continues to be Delivered record Grew above Double digit Margin Efficient ROI Employee originations systems AUM growth management from investments Engagement 10% / capital allocation hi
Slide 20: Questions & Answers
For personal use only Questions & Answers
Slide 21: Thank you
For personal use only 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.
Slide 22: Appendices
For personal use only Appendices 22
Slide 23: Large addressable market
MARKET OVERVIEW Large addressable market For personal use only We have gained share June 2022 Mortgages Asset Finance Total Addressable $2,421bn $180bn Mortgage Market grew in ¹ 1H CY2022 Market (AUM) 88% Conforming Consumer: $60bn⁴ 12%2 Non-Conforming Commercial: $122bn⁵ Commercial Asset Finance Ma
Slide 24: Housing activity remains elevated in Australia
MARKET OVERVIEW Housing activity remains elevated in Australia For personal use only Housing activity remains robust Supporting growth in credit Annual dwelling transfers and 12-month credit growth – housing¹ (‘000) Credit outstanding to Australian households for owner-occupied and investor housing²
Slide 25: Mortgage originations grew 48% and AUM 24%
BUSINESS UPDATE Mortgage originations grew 48% and AUM 24% in the first half For personal use only Mortgages Applications¹ ($bn) Originations ($bn) AUM² ($bn) Half Year Half Year Half Year 1.4 1.0 15.0 $14.0bn $4.1bn 14.0 1.2 $6.0bn 0.8 13.0 1.0 $2.8bn 0.6 12.0 $11.3bn 0.8 $5.0bn 11.0 0.6 0.4 10.0 $
Slide 26: Asset Finance originations grew 67% and AUM 43%
BUSINESS UPDATE Asset Finance originations grew 67% and AUM 43% in the first half For personal use only Asset Finance Applications¹ ($bn) Originations ($bn) AUM ($bn) Half Year Half Year Half Year 0.5 0.3 4.5 0.5 $1.5bn $2.4bn 0.3 4.0 $4.3bn 0.4 0.2 3.5 0.4 $0.9bn 0.3 $1.5bn 0.2 $3.0bn 3.0 0.3 0.2 $
Slide 27: Statutory income statement
FINANCIALS Half year ending Change B/(W) Statutory $m 1H 2022 2H 2021 1H 2021 1H 2022 v 1H 2021 Income Interest income 376.5 351.4 338.9 11.1% For personal use only Interest expense (184.0) (161.0) (162.7) (13.1%) statement Net interest income from continuing operations Lending fee income 192.5 36.1
Slide 28: Glossary & Disclaimer
For personal use only Glossary & Disclaimer 28
Slide 29: Glossary of Terms
PEPPER MONEY Glossary of Terms For personal use only Annualised Dividend Yield: dividend yield based on equivalent. AUM for the relevant period, expressed on an annualised average share price from time of 1 January 2022 to 30 June basis. 2022. Employee benefits expense/Total operating income: employ
Slide 30: Disclaimer
PEPPER MONEY Disclaimer For personal use only 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
Slide 31: Investor Relations
For personal use only 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.pepper.com.au Domestique Consulting Helen Karlis M +61 (0) 419 593 348/ E helen@domestiqueconsulting.com.au C