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Pepper reports record originations in 2021

The non-bank hit a new high in mortgage originations last year, coupled with growth in asset and commercial finance.

Pepper Money (Pepper) has published its financial results for the 2021 calendar year, announcing a record yearly mortgage origination sum of $6.4 billion.

The total represented an 89 per cent year-on-year growth in new home loans. 

Brokers accounted for 52 per cent of these loans, while third-party originators and direct-to-consumer originations respectively represented 45 per cent and 3 per cent. 

Pepper chief executive Mario Rehayem commented that the non-bank managed to achieve the results despite an “intensely competitive market environment and high levels of refinancing”. 

The surge in mortgage originations contributed to the ASX-listed lender’s total originations for last year ($8.5 billion), a year-on-year rise of 84 per cent.

Included in the total origination sum were prime originations, which surged by 85 per cent to $3.7 billion.

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“Our asset finance business saw originations grow by 70 per cent [to $185 billion], with commercial originations [$126 billion] growing 86 per cent and consumer [$59 billion] 55 per cent on [2020],” Mr Rehayem added. 

Commercial brokers, said to be “typically focusing on equipment and finance solutions” accounted for 28 per cent of Pepper’s asset finance loans. 

These figures were accompanied by the non-bank reporting a statutory net profit after tax of $130.7 million, marking a 31 per cent rise compared to 2020, and 10 basis point loss in its net interest margin (NIM), concluding 2021 at 2.56 per cent.

The figures stated that mortgage NIM reported a loss of 20 bps to 2.33 per cent, while asset finance NIM increased by 17 bps to 3.41 per cent. 

Further, the non-bank’s total gross lending loans and advances increased by 19 per cent year-on-year to $15.8 billion, with those related to asset finance rising by 33 per cent to $3.5 billion.

Mr Rehayem said, with these gross loans and advances being the “key driver of future revenue and profitability”, he believes the non-bank is off to a “strong start” for 2022. 

“We remain focused on executing our vision to help half a million customers trust Pepper Money to refinance their homes, cars, equipment and commercial properties by 2023,” Mr Rehayem said.

“Our customer, new product and distribution plans places us in the best position to continue to capture opportunities for growth.” 

However, the non-bank’s figures also referenced that its customer base grew by 59,780 over 2021, half of which said to be either the self-employed or small businesses. 

This boom of customers supports a consistent trend of more borrowers focusing towards non-banks and non-major banks, rather than the big four.

According to the latest findings of the monthly Broker Pulse survey, more than half of the brokers surveyed had used a non-bank lender over the month of January. 

This appeal of non-banks and non-major banks appears to be associated with speed, with this latest survey noting that non-banks average roughly seven business days to reach an initial credit decision.

ANZ, the slowest of the big four in turnaround times, was reported to have a period of 18 days in December.

[Related: Pepper closes 2021 with $4.8bn raised]

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