Rising car sales rev up Plenti loan originations

Investors said Plenti is delivering operational leverage; the company said it would reduce its 55 per cent cost-to-income ratio to 35 per cent in the medium term and new warehouse funding deals are lowering funding costs.

“As well as the positive competitive aspects for loan growth, the tech stack delivers operational leverage as they continue to scale, while volume growth and credit performance generates further warehouse and rated securitisation funding options, which should continue to materially decrease funding costs,” said Neil Brown, partner at Federation Asset Management, a Plenti shareholder.

Plenti’s loss for the year ended March 31 narrowed to $6.8 million from the year-earlier $16 million shortfall. The company said it would hit “positive monthly cash NPAT prior to June 2022” and its loan book has increased 10 per cent since the start of April as consumer confidence builds on back of the economic recovery.

Plenti has made $86 million in loans for renewable energy with originations climbing 33 per cent over the year as the company partners with the South Australian and NSW governments to support household investment in renewable energy.

New ASX sector

The performance of Plenti, formerly known as Ratesetter Australia, will be closely watched by advisers and potential investors in SocietyOne, which is lining up for a float.

Street Talk reported last week that SocietyOne is looking to list at a valuation of between $200 million – $230 million after a $60 million raising. Plenti raised $55 million in a listing last September and is currently valued at $200 million by the stockmarket.

Plenti stock, which was offered in the IPO at $1.66, has traded under water since and has traded choppily this calendar year between 90¢ and $1.44. Its shares rose 4.3 per cent to $1.21 on Monday and in mid-afternoon were opened down to be trading off 1¢ at $1.20 after half an hour of trading.

Harmoney and MoneyMe, other ASX-listed personal lenders, have also been lifting personal loan originations in a sign that category is shifting away from the major banks. But their shares prices have also had a rocky ride.

Plenti has shifted from a peer-to-peer lender to one funded by warehouse facilities, although it maintains two investor marketplace funding platforms. It lifted the funding limit on its secured, automotive warehouse to $350 million from $50 million during the financial year and established a second warehouse in December for renewable energy and personal loans with initial capacity of $100 million.

Since March 31 the $450 million of warehouse facilities has climbed to $550 million and Plenti said its average funding cost has reduced by 190 basis points compared to 2020.

Plenti said the shift to secured car loans had helped reduce credit losses, which were 0.96 per cent, down 59 per cent on financial year 2020.

Chief executive Daniel Foggo said Plenti “is well positioned for continued growth in FY22 across all of our lending verticals, leveraging our technology platform and customer reach”.