Plenti to turn a profit in the coming year

John Kavanagh

Consumer lender Plenti Group has forecast that it will be profitable in the current financial year, if it maintains its current lending growth and margin.

Established in 2014 and trading as RateSetter, Plenti was listed on the ASX last September. It released its results for the year to March 2021 yesterday, reporting 64 per cent growth in loan originations to A$470.4 million and 61 per cent growth in its loan portfolio to $614.6 million.

Plenti offers automotive loans, domestic renewable energy loans and personal loans. The automotive segment dominates the business, with a 310 per cent increase in originations to $231 million.

Plenti chief executive Daniel Foggo said automotive finance offered a lot of growth potential, as the big banks were less of a force in that market.

Renewable energy loan originations grew 33 per cent to $57 million and personal loan originations fell 2 per cent to $125 million. Personal loan originations were weak in the September half but bounced back in the March half.

Net income was up 26.2 per cent to $50.4 million. The loan impairment expense was $7.1 million, compared with 10.7 million in the previous corresponding period.

The company made a loss of $15.1 million, compared with $16.3 million the previous year. Net cash used in operating activities was $2.2 million, compared with $2.2 million the previous year.

The shift in the balance of the loan portfolio to auto finance made the business less risky but also lowered the average interest rate. The average interest yield fell from 12.8 per cent in 2019/20 to 11.2 per cent in the year to March. The loss rate fell from 2.3 per cent to 1 per cent.

The company has expanded its use of warehouse funding and, as a result, its funding rate fell from 6.8 per cent to 5.7 per cent.

The net interest margin rose from 3.8 per cent to 4.7 per cent.

Foggo said the current strong demand for vehicles is likely to be sustained. Plenti extended its distribution reach by establishing 1400 broker relationships during the year, taking the total to 10,400.

The company has been trialling a commercial auto loan and will launch it this year.

Fogo said the company expects to achieve positive monthly cash profit prior to June next year, while maintaining its investment in technology.