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N1H looks to expand funding after ‘profitable’ 2023

The lending group’s “overarching goal” is to strengthen and grow its balance sheet, according to its newly released annual report.

In its 2023 financial report, ASX-listed lending group N1 Holdings Limited (N1) revealed it had its sights set on an “overarching goal” to strengthen and grow its balance sheet in the aftermath of the Reserve Bank of Australia’s “aggressive” rate rise cycle.

The group, which entered the private lending space in 2017, has been diversifying into commercial lending in recent years and the annual report showed that this made up over 84 per cent of the group’s revenue in the 2023 financial year.

In FY23, the group brought in $11.8 million of revenue from commercial lending, an increase of 4.35 per cent from FY22, with mortgage broking revenue, including trail commissions, making up slightly over $1.3 million – approximately 9.63 per cent of the group’s revenue.

Speaking to Mortgage Business, N1’s chief executive and executive chairman Ren Hor Wong stated: “We are running a mortgage management business that complements our core private lending product as we are serving the same self-employed or SME market.

“The mortgage management business can be seen as an option to our private lending clients who need to seek a longer term financing option, therefore it’s a natural diversification. But our core activity remains in the private debt space, which naturally feeds into our mortgage management business.”

In the annual report, N1 labelled the mortgage broking and mortgage management side of its business as “the group’s defensive strategy”, which “assists in customer stickiness by generating cross-sale opportunities to [its] existing client database”.

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Looking to the future, the CEO said he did not forecast any additional interest rate movements from the central bank and is optimistic about the coming year.

Noting the “recovery in real estate market sentiment [and] businesses making investments again”, he added: “In future, we want to strengthen our core infrastructure, which we define as a set of systems to efficiently attract and deploy capital in the property-backed SME market.

“The rate-tightening cycle has stabilised and we are very optimistic for the future.

“The goal of strengthening our balance sheet is another initiative to improve our funding resilience, in order to expand our capacity to be able to deploy more capital and to improve our cost of funds.

“In the capital market there are two ways to raise capital – debt and equity, and we are definitely considering all viable options.

“As an ASX-listed entity we have many avenues to raise capital, meanwhile being profitable also enables the company to make use of retained profits to perform credit enhancement activities in our funding facilities.

“Our business model is simple: attract capital and deploy efficiently and in quality. The only way to attain this is via continuing to streamline our core infrastructure … a set of systems along the value chain of capital raising, loans origination, risk management, distribution channels and post-deployment management.

“To sum up, on one hand we ensure we are disciplined in rewarding our investors in rigid governance and risk management, on the other hand we ensure we work closely with our broker partners and their clients to achieve their financing goal.”

The future growth plans come after N1 announced it had recently grown its lending capacity to small businesses, exceeding $120 million, partially through the extension of its $55 million debt facility until July 2025.

[Related: AMP Bank upsizes RMBS]

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