Auto loans have become the core of consumer lender Plenti Group’s business, making up 54 per cent of its originations during the September half-year.
Auto loan originations grew by 218 per cent to A$257.7 million, compared with the previous corresponding period, while household renewable loans grew 63 per cent and personal loans grew 194 per cent.
Plenti is aiming to extend its reach into the auto loan market. Earlier this month it launched a range of electric vehicle finance products, including a financing deal with Tesla.
The EV loan rates will be at least 50 basis points lower than non-EV car loans. Plenti chief executive Daniel Foggo said an important part of the package was that EV car buyers would be able to borrow additional amounts for chargers, downloadable vehicle upgrades and accessories.
Overall, Plenti’s loan originations grew by 183 per cent to $472.8 million over the six months and the loan portfolio finished the half up 92 per cent at $753.8 million.
Plenti’s revenue increased 43 per cent to $37.2 million but its expenses increased by more – up 46 per cent to $41.5 million.
Big cost items included an 18 per cent increase in funding costs, a 300 per cent increase in the provision for expected credit loss. The company said the big increase in the ECL provision reflected the growth of the loan book.
Sales and marketing expenses were up 83 per cent.
The bottom line was a loss of $7.4 million, compared with a loss of $3.4 million in the previous corresponding period. Cash flow went from an inflow of $2.1 million in the September half last year to an outflow of $4.3 million in the latest half.
The average interest rate fell from 12.1 per cent to 9.7 per cent, as the business mix shifted to auto loans.
Plenti’s average funding rate fell from 6.3 per cent to 4 per cent. The company said more of its lending was financed through warehouse facilities with a lower cost of funds.
Loan impairments grew by 15.9 per cent to $2.6 million but the ratio of net charge-offs to average loans fell from 1.1 per cent to 0.7 per cent.