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Pepper originates record $5.6bn in 6 months

The non-bank lender delivered record originations of $5.6 billion in the first half of the calendar year, up 53 per cent on the same period last year.

Pepper Money Limited (Pepper Money) has released its financial results for the six months ended 30 June 2022 (1H 2022).

According to the results, total originations were up 53 per cent on the $3.7 billion from the prior comparative period (pcp), driven by strong mortgage and asset finance growth.

Its originations grew to a record $5.6 billion (from the $8.4 billion in applications) in the six months ended June, driven by prime mortgages.

The non-bank lender saw mortgage originations grow at four times system, taking its originations to $4.1 billion in the six months ended June, driven by prime mortgages.

Mortgage originations were therefore up 48 per cent in the half, with Pepper Money’s assets under management growing 24 per cent to $14 billion at the end of June 2022.

The non-bank lender saw more than half of its mortgage originations come from “prime” customers, with near prime making up 40 per cent of home loan originations and just 5 per cent being specialist.

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Moreover, less than a third of mortgage borrowers in the half were self-employed, with the majority being PAYG (or other) customers.

As well as mortgage growth, the non-bank revealed that asset finance originations had also accelerated, up 67 per cent on pcp to $1.5 billion.

Two-sixths of originations were for new and used cars, 21 per cent was for equipment, 10 per cent was for leisure vehicles, and 3 per cent was for electric vehicles.

Assets under management for asset finance grew 43 per cent – or 21.5 times system – to $4.3 billion in the first half of 2022.

As such, asset finance now makes up around a third of its total portfolio.

Pepper reported an overall statutory net profit after tax (NPAT) of $72.2 million for the six months ended 30 June 2022, up 29 per cent on pcp.

Adjusting for one-time expenses relating to its recent acquisition of Stratton Finance Pty Limited in CY2022, and IPO and related items in CY2021, pro-forma NPAT was up 11 per cent to $73.1 million.

Looking forward, Pepper Money chief executive Mario Rehayem said the lender would continue to ensure it is well funded for growth in 2H CY2022, highlighting that it recently settled its fifth public securitisation, raising $500 million and bringing the total funding raised this year to $3.0 billion.

Mr Rehayem said: Our business model is premised on understanding and managing risk. We have always held six months of funding head room to ensure we are protected in a downturn and are well supported to grow in an upturn.

“Our strong 1H CY2022 financial performance is testament to the resilience of our business, the diversity of our income streams, and our ability to respond to cycles and deliver attractive returns.

We entered CY2022 prepared for volatile market conditions with expectations of interest rate increases, macroeconomic and geopolitical uncertainty, and funding constraints.  

“Against this backdrop we accelerated opportunities to grow our loan books and delivered record originations of $5.6 billion in the half year ended 30 June 2022, up 53 per cent on PCP.  

“We have continued to grow well ahead of system, with our mortgage portfolio growing 4.0 times and asset finance growing 21.5 times systems versus second half 2021.

“With our total Assets Under Management at a record $19.4 billion as at 30 June 2022 and the strength of the income earned from AUM, we are well positioned to navigate the current challenging market conditions.”

[Related: Pepper prices latest securitisation at $500m]

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