Robust loan book, higher credit quality assets drive MoneyMe’s solid first quarter

MoneyMe reports sustainable returns for Q1 FY24 from an increasingly robust loan book
Higher– credit– quality assets drive a reduction in net losses, which continue to trend lower
MoneyMe explores application of generative AI in customer service interactions

MoneyMe has delivered a solid start to FY24 continuing its strategy of building sustainable profits by reducing credit losses, increasing its secured assets, embracing AI, and advancing its tech for future opportunities.

MoneyMe (ASX:MME) has reported sustainable returns from an increasingly robust loan book  for Q1 FY24 with the fintech saying its loan book remained stable, maintaining a healthy net interest rate margin of 11% for the quarter.

MME’s focus on higher-credit- quality borrowers and secured assets continued to improve its credit profile, with the measures positively impacting its quarterly credit loss performance.

Consistent with its strategy to position for sustainable and profitable growth, MME intensified efforts to refine its tech platform, further optimising operations and improving operating leverage during Q1 FY24.

Solid Q1 FY24 results

MME managing director and CEO Clayton Howes says MME has delivered a “solid first quarter”, executing on its profitable strategy by reducing losses, increasing its secured assets, and advancing its technology for future opportunities.

“Our loan book remained stable, maintaining a healthy net interest rate margin of 11% for the quarter, while our focus on higher-credit quality borrowers and secured assets continues to improve our credit profile,” he says.

Among financial highlights for the quarter:

Gross revenue of $55m Q1 FY24, in line with Q4 FY23 ($56m)
Strong net interest margin of 11% in Q1 FY24, up from 10% in Q4 FY23
Gross customer receivables of $1.1 billion, in line with Q4 FY23 ($1.1bn)
Principal originations of $130m for Q1 FY24, in line with Q4 FY23 of $127 million
Secured assets increased in Q1 FY24 to be 46% of the total loan book, up on Q4 FY23 (44%)

MME says delivering sustainable statutory and cash NPAT remains its focus.

Higher –quality credit improving loss performance

MME’s strategy of targeting higher- credit- quality borrowers and increasing secured assets is also starting to pay off.
Howes said as anticipated, the measures positively impacted its quarterly credit loss performance.

Net losses continued to trend lower during the quarter to <4.9%, down from 5.6% in Q4 FY23.

The average Equifax credit score was 733 in Q1 FY24, slightly up from 727 the previous quarter, while 84% of loans had a closing Equifax score of 600 or above for Q1 FY24.

MME says 46% of its loan book is now secured, continuing its plan to incrementally increase the proportion of secured assets  over time.

Source: MME

Building on business platform

MME says warehouse financing renewals were executed in Q1 FY24 with its Autopay, Horizon 2020 and SocietyOne warehouses extended into CY24 as planned.

During the quarter, the company increased operational  efficiency through further digitisation of application journeys, including broker integrations and automation of operations processes.

“Consistent with our strategy to position MoneyMe for sustainable and profitable growth, we have intensified efforts to refine our technology platform, further optimising our operations,” Howes says.

“As a result, our operating leverage continued to grow during the quarter.”

The fintech also says it is looking at generative AI to drive further efficiencies while enhancing the customer experience.

“As part of our technology roadmap, we are actively exploring and developing the application of generative AI in customer service interactions and various aspects of our operations,”, Howes says.

Green car finance gains popularity

The company achieved B Corp Certification in Q1 FY24 with a B Impact Assessment Score of 91.2, well above the 80-point certification threshold.

Howes says achievement of B Corp certification marked a significant milestone in its commitment to ESG values.

He says MME was also encouraged to see a steady uptick in electric vehicle (EV) loans since the launch of its discounted EV loan in June.

“This not only aligns with our ESG focus but also reflects the growing popularity of EVs among our customers,” he says.

This article was developed in collaboration with MoneyMe, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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