Neobank 86 400 have banked A$34 million in new capital, and needed to support fast liability growth.
The capital raising "is at the lower end of what we were looking for," Robert Bell, the bank's CEO, said in an interview with Banking Day yesterday.
"This is real money, it's banked, we've issued the shares," he said of a drawn out funding round on which Morgan Stanley acted as adviser.
Bell said the new investors include "an Australian superannuation fund, fund managers, high net worth individuals and family offices", while there is also a minor top-up investment from Cuscal. The new money brings 86 400's total capital to $90 million.
Cuscal's ownership has been diluted to 70 per cent via this Series A raise and Cuscal must over time reduce its stake to 20 per cent.
Bell said 86 400's deposits were now around $240 million, which is up more than $60 million over the five weeks since the end of February, the latest data published by APRA.
"We've seen steady, controlled growth in deposits over time," Bell said.
86 400 is maintaining an interest rate of 2.00 per cent on its Save account, a tenuous price point with the cash rate locked down at 0.25 per cent.
"We always planned for a very low interest rate environment, but we didn't expect it so soon," Bell said.
Mortgages either funded or approved stand at $20 million, and Bell said he expected this number "to grow significantly in the coming months, as 86 400 partners with further broker partners …. We anticipate having a mortgage book of close to $2 billion by the end of 2021."
"We're putting on mortgage customers as we grow deposits. The regulator requires us to show deposits before we deploy that," he said.
Bell said the bank "has more than 170,000 accounts on its platform (after around nine months in business) and sees more than 350,000 transactions and balance updates each day.
"At our current rate of growth, we should hit 500,000 accounts on the platform in the next 12 months."
Bell would not be drawn on how long it might take for the bank to move into profit.
"There's no doubt given COVID-19 the strains on raising capital today are harder than it was six months ago, it's just a reality.
"We have people who believe in the 86 400 story."