Pepper Money disclosed its financial outcomes for the calendar year ending Dec. 31, showcasing a complex fiscal landscape.
The company reported a pre-tax profit and loan loss expense of $209.2 million, marking a 9% increase from the previous year.
However, both the statutory and pro-forma net profit after tax (NPAT) saw declines, with figures settling at $98.2 million, down by 10% and 12% respectively compared to CY2023.
The ASX-listed non-bank lender, which introduced key policy updates to better cater to self-employed individuals in mid-2024, experienced a varied performance across its product lines.
Total originations amounted to $7 billion, reflecting a slight 3% drop year-on-year.
Notably, mortgage originations in the second half of 2024 surged by 27%, contributing to a yearly total of $4.1 billion – a 5% increase from the prior year.
In contrast, asset finance faced a 13% decline over the same period, despite a modest uptick in the latter half of the year.
Assets under management concluded the year at $19.1 billion, slightly down by 3%.
The net interest margin (NIM) for CY2024 impressively grew by 12 basis points to 1.97%, reflecting gains across both mortgage and asset finance sectors.
These segments saw NIM improvements of eight and five basis points, respectively, supported by stabilised funding costs and strategic pricing actions.
Pepper Money, which leverages technology and investment in its digital innovations to equip brokers with the right tools and knowledge to help more customers, noted a mixed credit performance.
Mortgage sectors benefited from a robust market, leading to a lower loan loss expense.
However, the asset finance sector was less fortunate, with increased late-stage arrears and insolvencies pushing the loan loss expense higher by $29.4 million compared to the previous year.
Management adjustments in loan loss provisions aimed to bolster resilience against these market pressures.
Operationally, the company maintained its expense levels with only a slight increase in overall expenses due to higher impairments and corporate interest costs.
Strategic actions throughout the year included the acquisition of a 35% stake in Stratton Finance, and significant capital raising through securitisations and whole loan sales totaling over $5.2 billion.
The Pepper Money board declared a fully franked final dividend of 7.1 cents per share, contributing to a total annualised dividend yield of 8.6%, a notable increase from the previous 6.4%.
Looking ahead, CEO Mario Rehayem (pictured) expressed confidence in the company’s positioning for 2025, emphasising a strategic balance of growth, risk management, and capital efficiency poised to capitalise on improving economic conditions.
Prior to the release of Pepper Money’s CY2024 results, the non-bank announced a 0.25% reduction in variable interest rates for its range of loans starting March 5, in response to the Reserve Bank’s latest rate move.
