Slide 1: FY24 Investor Presentation
FY24 Investor Presentation David Stevens CEO and Managing Director Simon Ward CFO All values in $AUD unless stated otherwise HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 23AUGUST AUGUST2024 2024 1
Slide 2: Contents
Contents 1. About us 2. Highlights & Stellare® 2.0 3. Financial results 4. Outlook Appendix HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 AUGUST 2024 2
Slide 3: About us
About us HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 23AUGUST AUGUST2024 2024 3
Slide 4: Fair, simple, personal loan: what sets Harmoney apart
What sets Harmoney apart Fair, simple, personal loan Loans up to $70,000, average $20,000 Consumer-direct, data driven automation Personalised pricing ● AU & NZ’s largest 100% consumer-direct online lender 5.7% - 24.99% ● Market opportunity >$150bn, current market share <1% One establishment fee, ●
Slide 5: Harmoney on a page
Harmoney on a page HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 AUGUST 2024 5
Slide 6: Data + AI Automation
Data + AI Automation Every month, over 10,000 new High volumes of up-to-the-moment consumer customer applications help us financial data – combined with our 10+ years of improve our AI and automation historic data – supercharges training of our AI models, helping us optimise for: 2021 & 2023 ● High
Slide 7: The Harmoney business model maximises customer lifetime value
The Harmoney business model maximises customer lifetime value Right customer Great experience Massive scale • Build reliable target customer model • First-class customer experience • Exploit tech to build scale, speed, through AI and high quality first-party creates annuity revenue as and automation
Slide 8: Highlights & Stellare 2.0
Highlights & Stellare 2.0 HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 23AUGUST AUGUST2024 2024 8
Slide 9: FY24 Highlights
FY24 Highlights Profitable growth cont. 10% NIM 4Q24 Acquisition costs down Cost to income % 5th consecutive half of New lending NIM >10% Acquisition costs reduced Automation drove continued both loan book growth and will flow through to a by 14% on pcp. efficiency gains with cost to positive Cash NPA
Slide 10: Stellare 2.0: Core banking + Automation = Market opportunity
Stellare 2.0 Core banking + Automation = Market opportunity Core banking - Cloud native Process automation Market opportunity Implemented a Tier 1 cloud native core Automated platform enabling scale, Core banking platform plus process banking suite, used by Global Banks. speed and a superior custome
Slide 11: Every month 10,000 customers apply with Harmoney
Every month 10,000 customers apply with Harmoney Stellare 2.0 helps more of them than ever before Australian new customer originations Stellare 2.0 refined risk rules July 2024 vs July 2023 In Stellare 1.0 an applicant looking for $5,000 was + 50% assessed in a similar way to someone looking for Inc
Slide 12: Platform Power: Fueling Consistent Growth Beyond July '24
Platform Power: Fueling Consistent Growth Beyond July ‘24 Scalable Safe Profitable 90% 10% + 50% Fully automated decisions Lower arrears than Stellare® 1.0 Increase in Australian (Average Equifax unchanged) new customer originations >10% 1:1 30% Technology cost saving Every loan audited (post settle
Slide 13: Financial results
Financial results HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 23AUGUST AUGUST2024 2024 13
Slide 14: Resilient profitability through rising interest rate cycle
Resilient profitability through rising interest rate cycle FY24 FY23 Change Loan book $758m $744m 2% Revenue $123m $107m 15% 10.2% 4Q24 Net interest income % 8.8% new business 9.6% (80bps) 6.3% 4Q24 Risk adjusted income % 4.8% new business 6.0% (120bps) Acquisition costs $10.6m $12.3m (14%) Cost to
Slide 15: Loan book and revenue growth continue through tightening cycle
Loan book and revenue growth continue through tightening cycle Revenue growth 15% on pcp Group revenue growth ● Higher market interest rates have suppressed 15% Growth borrower appetite and capacity. ● Continued loan book growth with average loan book up 10% on pcp. ● Revenue up 15% on pcp to $123m,
Slide 16: Diversified capital efficient funding program
Diversified capital efficient funding program Funding from 3 of the “Big 4ˮ banks Average funding rate Interest Hedging ● FY24 average funding rate 7.7%, +170bps on pcp, rate % coverage % on higher market rates and improved funding leverage. ● Capital efficient with borrowings 95% of loan book (incl.
Slide 17: Deep data and AI deliver prime loan book
Deep data and AI deliver prime loan book Falling credit losses Static loss rate Portfolio ● 2H24 credit losses 4.0%, 20bps lower than 1H24. Earlier AU scorecard Rest of portfolio ● Earlier Australian credit scorecard, replaced over 24 months ago, having diminishing impact on portfolio. ● Risk adjust
Slide 18: AI and consumer-direct model drive low Customer Acquisition Cost
AI and consumer-direct model drive low Customer Acquisition Cost CAC Flexible consumer-direct model CAC and CAC % to originations ● Harmoney and Google algorithms work in partnership to find customers likely to take a Harmoney loan. ● Customer acquisition costs 14% lower than pcp. ● Small increase
Slide 19: Stellare automation powers scalability
Stellare ® automation powers scalability Scalability drives profitability Cost to income ratio 24% Cost to ● Cost to income ratio improves further to 24%1. income % Loan book $ ● Highly automated Stellare® platform delivered: ● Loan book growth, whilst reducing cash operating expenses by 4% on pcp.
Slide 20: Outlook
Outlook HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 23AUGUST AUGUST2024 2024 20
Slide 21: Strategic Priorities FY25
Strategic Priorities FY25 New core platform to drive growth and expand capability to convert on new opportunities Platform Conversion New Opportunities Margin New Zealand rollout AI driven personalisation Partnerships Pricing optimisation engine Credit scenario backtesting Partner API integration Ne
Slide 22: Outlook - Targeting 20% Cash RoE
Outlook - Targeting 20% Cash RoE Interest rates & asset quality Growth outlook FY25 outlook Ability to pass through targeted Harmoney’s consumer-direct 1H25: Stellare 2.0 rollout in NZ interest rate increases to achieve model is taking market share from 10% net interest margins on new banks in $150b
Slide 23: Outlook continued: 20% Cash RoE run rate in 2H25
Outlook continued: 20% Cash RoE run rate in 2H25 Within reach: Scenario explained Midpoint RAI% scenario ● Achieved 6.0% risk adjusted income (RAI)%1 in FY23, 4.8% in FY24 driven by higher funding costs. With RAI% widening (4Q24 new business: 6.3%), scenario shown adopts midpoint 5.4%. ● At midpoint
Slide 24: Join our Investor Hub
Join our Investor Hub: harmoney.com.au/invest ● Investor Hub is the best way to stay informed and connected with all things ASX:HMY ● See videos accompanying our ASX announcements, interviews, research reports, and webinars. ● Engage directly with Harmoney’s leadership team. Comment and ask question
Slide 25: Appendix
Appendix HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 23AUGUST AUGUST2024 2024 25
Slide 26: $758m Loan Book
$758m Loan Book Loan Employment Region purpose status HARMONEY ©2024 FY24 INVESTOR PRESENTATION 23 AUGUST 2024 26
Slide 27: Profit and loss
Profit and loss Year ended Year ended 30 June 2024 30 June 2023 Change Change % #039;000 #039;000 #039;000 Interest income 121,663 105,539 16,124 15% Other income 878 1,534 (656) (43%) Total income 122,541 107,073 15,468 14% Interest expense 55,848 39,824 (16,024) (40%) Incurred credit losses 30,699 24,552 (
Slide 28: Key operating and financial metrics
Key operating and financial metrics Year ended Year ended 30 June 2024 30 June 2023 Change % Loan book value and growth Total originations (#039;000) 327,209 426,234 (23%) New customer originations (#039;000) 195,509 253,595 (23%) Existing customer originations (#039;000) 131,700 172,639 (24%) Loan book (per
Slide 29: Cash Flow and Balance Sheet
Cash Flow Year ended Year ended Balance Sheet 30 June 2024 30 June 2023 30 June 2024 30 June 2023 #039;000 #039;000 #039;000 #039;000 Cash flows from operating activities Cash and cash equivalents 37,744 43,454 Interest received 119,123 102,134 Trade and other assets 2,959 1,968 Interest paid (57,243) (38,734) F
Slide 30: Important notice and disclaimer
Important notice and disclaimer The material in this presentation is provided for general information purposes No representation or warranty, express or implied, is made as to the fairness, only and is current as at the date of this presentation. It is not a prospectus or completeness, accuracy, ade