In a trading update yesterday, DirectMoney revealed that its new agreement with MyState was non-exclusive for both parties and allows the online lender to potentially offer its direct channel personal loan applicants with an alternative financing option.
“We are delighted to establish a referral agreement with MyState as it assists us to provide continued support and service to our valued unsecured personal loan applicants,” DirectMoney CEO Peter Beaumont said.
“This is the first agreement of this kind we have signed. It will no doubt lead to a closer understanding of each other’s unsecured personal loan business.”
MyState managing director and chief executive officer Melos Sulicich said the bank was continuing to expand its lending business across Australia and the agreement with DirectMoney was in line with this objective.
“We recognise that referrals from their online loan origination channel can provide us with an additional means of expanding our unsecured personal loan book,” Mr Sulicich said.
News of the agreement came just two weeks after DirectMoney revealed it had been forced to offload some of its business to another lender following strong demand.
In a statement to shareholders on 16 May, DirectMoney executive chairman Stephen Porges foreshadowed this week’s announcement, explaining the group would be establishing a referral arrangement with “a trusted lending institution”, which was intended to provide a further option for its “excess loan applications which cannot by supported by sale of loans to the fund or institutional investors”.
“This referral arrangement is also attractive as it has the potential to be extended into a more permanent loan sales arrangement,” Mr Porges said.
“Consumer appetite for DirectMoney personal loans is strong and we are committed to our diversified strategies to fund this demand.”
Mr Porges said the ASX-listed lender remained “intensely focused” on progressing loan sales to institutions, as well as the development of a funding warehouse.
“At the same time, we are rolling out a strong marketing program for the fund which, as we have said, will be a centrepiece of the DirectMoney business model in the medium-to-long term,” he said.
“This is both a unique opportunity for Australian retail investors and a significant source of funding for our business.”
As of March 2016, DirectMoney held $6.78 million of loans and had net assets of $9.10 million on its consolidated balance sheet.
[Related: MyState appoints new CFO]