Pepper Money celebrates record half-year results

Pepper Money has announced mortgage originations are up 48% to $14bn and asset finance originations are up 67% in record half-year results for the non-bank.

Total loan originations are up 53% and total operating income rose12% to $198.4m.

Pepper Money has reported a statutory net profit after tax (NPAT) of $72.2m for the six months ended June 30, 2022, which was up 29% on Q2, 2021.

Pepper Money CEO Mario Rehayem (pictured above) said the non-bank lender’s strong financial performance in the first half of 2022 was a testament to the resilience of its business.

“We entered CY22 (calendar year 2022) prepared for volatile market conditions with expectations of interest rate increases, macroeconomic and geopolitical uncertainty and funding constraints,” Rehayem said.

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

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To support originations growth, Pepper Money closed four securitisations in 1H CY22 totalling $2.5bn and increased its warehouse capacity to $11bn. This funding included a $330m green bond program and Pepper Money’s first social bond of $300m re.rcing its commitment to sustainability.

Rehayem said Pepper Money continued to grow well ahead of system with its mortgage portfolio growing four times and asset finance growing 21.5 times versus the second half of 2021.

“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,” he said.”

“We have maintained our disciplined and prudent approach to credit risk management. We continue to leverage our 22 years of experience of managing through cycles, utilising our data analytics capabilities.”

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Rehayem said while Australia remained on track to deliver positive economic growth, rising interest rates appeared likely to continue over the balance of CY22 and into CY23 if inflation remained elevated.

“Since the Reserve Bank of Australia commenced rate rises in May 2022, the industry has experienced a decline in mortgage applications,” he said.

“According to Equifax, for the three months from May to July 2022, mortgage enquiries declined 21.6% on the prior three-month period (February to April 2022), 7.8% on the prior corresponding period (May – July 2021) and 14.9% in July 2022 compared to June 2022.”

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