Harmoney Corp Limited (HMY) Earnings Call Transcript

Hi, everyone. I'm David Stevens, the CEO of Harmoney. And for those of you who aren't familiar with us, we are Australasia's largest 100% consumer-direct personal lender. We offer both secured and unsecured personal loans, up to $70,000, 100% online. This short video accompanies our financial year 2024 third quarter trading update released today. I just wanted to take a brief moment to highlight a few key takeaways from that announcement. If you have any questions on the announcement, please submit them here through our Investor Hub. We will get back to you as quickly as we can. So looking at our performance over the last 9 months to 31 March '24. I'm really pleased to report that we have continued growing our loan book, which is now $757 million, and we remain on track for another year of positive cash net profit after tax. Those of you who follow the nonbank finance sector closely will appreciate that this dual achievement is not common. Adjusting to higher rates has constrained many consumers' slowing growth and has driven increases in our cost of funds. We are definitely not immune to these pressures as our growth has moderated. However, it's satisfying that our consumer-direct model has demonstrated its resilience through yet another phase of the economic cycle, maintaining profitable growth where others have not. In addition, we're pleased to report that our Australian loan book has hit another milestone, reaching $400 million this quarter, now 53% of our total portfolio. Our loan book has driven year-to-date revenue to $91 million, up 18% from $77 million at the same time last year. Higher funding costs have compressed our year-to-date net interest margin to 8.8% with funding costs increasing faster than the average book rate. However, net interest margin on new lending in the current quarter was 10%, which is driving our portfolio back towards our 9% to 10% target range. If you followed our half year announcement, you may recall that we reported a slight uptick in credit losses to 4.2% at that time. Pleasingly, as guided at the half year, these have already moderated to 4.1%, a trend which we expect to continue with loans originated on our improved Australian scorecard, which was implemented over 20 months ago, now making up the majority of the Australian loan book. Thanks to the high levels of automation in our Stellare platform, our standout cost-to-income ratio has continued to fall as our book and income have grown. For the year-to-date, our cost to income is down to 23% from an already low 28% at the same point last year. The rollout of our new Stellare 2.0 platform in Australia is progressing well, every day offering more and more Australians a faster and more seamless experience, which we will also be rolling out in New Zealand. In addition to the improved customer experience, the enhanced automation that the Stellare 2.0 provides will continue driving down our cost to serve customers. Our new Stellare 2.0 platform, supported by our positive cash NPAT, strong cash and capital position as well as our diversified warehouse funding facilities and securitization program, have us very well positioned to take advantage of improved market conditions in the coming period. I look forward to sharing our next update with you, and meanwhile, responding to any questions you may have in our Investor Hub. Thank you.