Pepper Money Ltd · ASX:PPM
Pepper Money — H1 2021 Earnings Presentation
38 slides from Pepper Money's earnings presentation, Aug 24, 2021
Slide 1: Pepper Money Investor Presentation Half Year Results
Pepper Money Investor Presentation Half Year Results August 2021 Copyright 2021 Pepper Money Limited. Confidential.
Slide 2: Today's Presenters
P E P P E R M O N E Y Today’s Presenters Mario Therese Rehayem McGrath CEO CFO • Joined Pepper Money in 2011 • Joined Pepper Money in 2018 Appointed CEO of Pepper as CFO Money in 2017 • Over 25 years of international • Over 18 years experience experience in finance, strategic across banking and fina
Slide 3: Key Highlights
Key Highlights 3 Copyright 2021 Pepper Money Limited. Confidential.
Slide 4: 1H CY2021 Highlights
P E P P E R M O N E Y 1H CY2021 HIGHLIGHTS $66.1m $1.5bn ( v e r s u s 1 H C Y 2 0 2 0 ) ¹ Pro-forma NPAT Securitisation Delivering +57% growth TO TAL AU M ² O R I G I N AT I O N S on PCP $0.7bn Prime warehouse $16.0bn 5% $3.7bn 250,000+ capacity added 40% higher higher Customers helped since 2014⁶
Slide 5: Business Update
Business Update 5 Copyright 2021 Pepper Money Limited. Confidential.
Slide 6: Pepper's mission is to help people succeed
B U S I N E S S U P D AT E Pepper’s mission is to help people succeed This is possible because of the core values at the heart of our brand: CAN DO BALANCED REAL We are ambitious and entrepreneurial, so we We come with considerable experience; we We respect people and are totally honest with look fo
Slide 7: Delivering strong consistent growth
B U S I N E S S U P D AT E Delivering strong consistent growth: Business highlights 1H CY2021 Pro-forma NPAT $66.1m, +57% above PCP Efficient and Brand strength scalable business and security Helping growth Engaged and • The Australian Lending customers empowered Award – Best Specialist • Supporting
Slide 8: Record originations in Mortgages & Asset Finance
B U S I N E S S U P D AT E Record originations in Strong performance over the second half Mortgages & Asset of 2020 continued in 2021 Finance M O R T G AG E S Applications¹ ² ($m) Originations² ($m) AUM² ($bn) 1,200 14.0 600 1,000 12.0 800 10.0 400 8.0 600 6.0 400 200 4.0 200 2.0 - 0 - Jan Feb Mar A
Slide 9: AUM movement
B U S I N E S S U P D AT E AUM movement For most of 2020, Pepper’s non-conforming Focus on 2H CY2021 – refinancing conditions conditional prepayment customer retention through Prime prepayment rate benchmark² for non-conforming rate (CPR) has increased • Supporting customer through borrowers were re
Slide 10: Record originations in Mortgages & Asset Finance
B U S I N E S S U P D AT E Record originations in Strong performance over the second half Mortgages & Asset of 2020 continued in 2021 Finance AS S E T F I N AN C E Applications¹ ($m) Originations ($m) AUM ($bn) 350 240 3.5 300 3.0 200 250 2.5 160 200 2.0 120 150 1.5 80 100 1.0 50 40 0.5 - - - Jan Fe
Slide 11: 1H CY2021 CTI: 43.3%
B U S I N E S S U P D AT E 1H CY2021 CTI: 43.3% Digital capabilities 0.6% improvement vs PCP MORTGAGES MORTGAGES Pepper Product Pepper Resolve Pepper Sage – Underwriting Selector >14% 3,042 Go-live March 2021 19% – Q2 2021 System embedded Automation of simple Customers provided a Contributions to or
Slide 12: Funding performance
B U S I N E S S U P D AT E PRS30: $0.85bn priced August 12th - bringing Funding performance funding to $2.4bn in 2021 1H CY2021 Highlights $16.84bn Non-Conforming RMBS S E C U R I T I S AT I O N I - P R I M E Margin² 4,783 I-Prime 2021-1 at $0.75bn 4,400 49bps In excess of $24.8bn 3,512 issued March
Slide 13: Business response to COVID-19 lockdowns
B U S I N E S S U P D AT E Business response to COVID-19 lockdowns Learnings from Customer focus Maintaining business Strong Employee 2020 activated & support momentum funding support Learnings from 2020 • Emergency assistance • Business as usual – momentum continues • Markets and investors • Seamle
Slide 14: Financials
Financials 14 Copyright 2021 Pepper Money Limited. Confidential.
Slide 15: Financial performance (Pro-forma)
P E P P E R M O N E Y Financial performance (Pro-forma) Half year to June VOLUME INCOME EXPENSES / FTE PROFIT Originations ($bn) Net Interest¹ ($m) Operating Expenses ($m) EBITDA ($m) 3.16% 3.37% 3.7 2.62% 60.6% 2.56% 2.59% +42% 2.13% 2.43% 2.40% 2.7 2.6 0.9 1.92% 43.9% 43.3% 172.9 176.5 0.6 0.5 38.
Slide 16: Pro-forma expenses
F I N A N C I A L S Pro-forma expenses Half year to June Operating Expenses Half Year Ending ($m) Half Year Ending 43.9% 43.3% $M Jun 2021 Jun 2020 Change B/(W) 81.4 82.8 Employee benefits expense (48.6) (43.4) (12.1%) 2.5 2.9 CDF interest Marketing expenses (4.5) (4.6) 0.6% 12.6 10.7 D&A expense 5.
Slide 17: NIM movement
P E P P E R M O N E Y NIM movement +3bps (0.02%) Overall NIM improves 3bps on PCP driven by increased (0.35%) 0.41% contribution from Asset Finance, where NIM has increased 21bps on 1H CY2020 – driven by COF and 2.56% 2.59% positive mix. Record originations growth in Mortgages in TOTAL part achieved
Slide 18: Loan loss expense & provision
F I N A N C I A L S Total loan loss provision decreased to $110.6 million from $113.3 million in the PCP reflecting improved economic conditions and outlook. Provision coverage (excluding COVID-19 Loan loss expense Management overlay) remains consistent with coverage at 0.65%. & provision Total Prov
Slide 19: Pro-forma Income statement
P E P P E R M O N E Y Half Year Ending $M Jun 2021 Jun 2020 Change B/(W) Pro-forma Interest income 338.9 360.4 (6.0%) Income statement Interest expense (162.7) (187.5) 13.2% Half year to June Net interest income from continuing operations 176.2 172.9 1.9% Net lending fees 5.4 3.8 40.0% Whole loan sa
Slide 20: Pro-forma Metrics
P E P P E R M O N E Y Half Year Ending $M Jun 2021 Jun 2020 Change B/(W) Pro-forma Volume Metrics Originations - Mortgages Originations - Asset Finance 2,789 895 2,084 540 33.9% 65.8% Half year to June Total Originations 3,684 2,623 40.4% AUM lending - Mortgages 11,335 11,127 1.9% AUM lending - Asse
Slide 21: Summary
Summary 21 Copyright 2021 Pepper Money Limited. Confidential.
Slide 22: Outlook
O U T L O O K Subject to no significant deterioration in economic conditions given the ongoing uncertainty relating to the COVID-19 pandemic, Pepper expects to exceed its Positioned for IPO Prospectus forecast for CY2021 Pro-forma NPAT of $120.7 million sustainable growth Our mission is 2H CY2021 FO
Slide 23: Questions & Answers
Questions & Answers 23 Copyright 2021 Pepper Money Limited. Confidential.
Slide 24: Thank You
THANK YOU on behalf of all of Pepper Money S T AY SAFE Copyright 2021 Pepper Money Limited. Confidential.
Slide 25: Appendices
Appendices 25 Copyright 2021 Pepper Money Limited. Confidential.
Slide 26: Housing activity remains elevated in Australia
M A R K E T O V E R V I E W Housing activity remains elevated in Australia Housing activity remains robust Supporting growth in credit Annual dwelling transfers and 12-month Credit outstanding to Australian households for credit growth – housing¹ (‘000) owner-occupied and investor housing² ($ billio
Slide 27: The Australian asset finance market has undergone a period of consolidation
M A R K E T O V E R V I E W April October October March June The Australian asset Macquarie acquired a portfolio of approx. Westpac acquired select businesses of Macquarie acquired ANZ’s ANZ Bank suspended its Westpac announced sale finance market has Lloyd’s Banking 2010 2013 2015 2018 2020 60,000
Slide 28: Large addressable market
M A R K E T O V E R V I E W Large addressable market 1 June 2021 MORTGAGES ASSET FINANCE Pepper Money has significant Total Addressable Market (AUM) headroom within its core markets, $2,241bn 1 $57bn 4 88% Conforming Consumer motor and equipment deploying a 12%2 Non-Conforming financing only; commer
Slide 29: Mortgages portfolio
P O R T F O L I O O V E R V I E W 1H CY2021 originations by Loan Type¹ Mortgages portfolio 1H CY2021 originations by Geography¹ Composition 27% Alt Doc Full Doc 73% 1H CY2021 AUM (close) Weighted Average Indexed LVR² NT 0% QLD 1H CY2021 originations by Occupancy Classification¹ 61% WA 16% Australia
Slide 30: Asset Finance portfolio
P O R T F O L I O O V E R V I E W 1H CY2021 originations by Customer Type¹ Asset Finance portfolio 1H CY2021 originations by Geography¹ Composition Commercial 48% 52% 1H CY2021 originations by Original Loan Size¹ Consumer < $5k 0% NT $5–15k 2% 1% QLD $15–$25k 9% 21% 1H CY2021 originations by Asset C
Slide 31: Pro-forma adjustments
P E P P E R M O N E Y Pro-forma adjustments Statutory to Pro-forma half year to June $M Jun 2021 Pro-forma items are in line with IPO forecast Public company costs Corporate debt costs Statutory NPAT 56.0 Reversal of all related party Includes ongoing ASX fees, D&O insurance and Co Sec shareholder l
Slide 32: Statutory Income statement
P E P P E R M O N E Y Half Year Ending $M Jun 2021 Jun 2020 Change B/(W) Statutory Interest income 338.9 360.4 (6.0%) Income statement Interest expense (162.7) (187.5) 13.2% Half year to June Net interest income from continuing operations 176.2 172.9 1.9% Lending fee income 28.3 26.6 6.4% Lending ex
Slide 33: Balance Sheet
F I N A N C I A L S As at 30-Jun 2021 As at 31-Dec 2020 $M $M Assets Balance Sheet Cash and cash equivalents Receivables 836.7 19.2 885.5 5.4 Statutory Loans and advances 14,339.7 13,310.8 Derivative financial assets 3.9 1.1 Other financial assets 18.5 19.6 Other assets 7.6 4.0 Deferred tax assets 4
Slide 34: Experienced Executive
P E P P E R M O N E Y Experienced Executive Pepper Money has a dedicated, focused executive team with the experience and proven track record both at Pepper Money and externally, to continue to grow and drive the business. Mario Rehayem Chief Executive Officer 18 years | 10 years Therese McGrath Anth
Slide 35: Glossary & Disclaimer
Glossary & Disclaimer 35 Copyright 2021 Pepper Money Limited. Confidential.
Slide 36: Glossary of Terms
P E P P E R M O N E Y Glossary of Terms • AUM – lending (closing): assets under • Employee benefits expense/Total operating • PCP: refers to prior comparative period being management originated and serviced income: employee benefits expenses divided June 2020 in this presentation. (securitised and P
Slide 37: Disclaimer
Disclaimer Summary information Certain figures, amounts, percentages, estimates, calculations of value and fractions provided in this Presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures This Presentation contains summar
Slide 38: Investor Relations
Investor Relations Catherine Buckmaster T +61 2 7227 3879 E cbuckmaster@pepper.com.au Media Relations For more information visit Domestique Consulting www.pepper.com.au Helen Karlis M +61 (0) 419 593 348/ E helen@domestiqueconsulting.com.au Celia Moore M +61 (0) 432 344 069 E celia@domestiqueconsult