Harmoney's YTD 31 March 2024 Performance Highlights

Harmoney Corp Limited (ASX: $HMY) has reported a 4% growth in its loan book for the 9 months ended 31 March 2024, reaching $400m in Australia, representing 53% of the group loan book. The company also achieved an 18% revenue growth, with credit loss % improving to 4.1% and cost to income ratio down to an impressive 23%.

CEO & Managing Director David Stevens on YTD 31 March 2024 Performance

We have continued our focus on driving profitable loan book growth in this financial year. The business reached a new milestone with the loan book in Australia reaching $400m, representing 53% of the total group book. With our positive Cash NPAT, strong cash and capital position, diversified warehouse funding facilities and securitisation program, and recently launched Stellare 2.0 platform, we believe we are well positioned to take advantage of improving market conditions in the coming period. We also continue to improve our cost to income ratio, which is an industry-leading 23%, as the loan book continues to grow, and with ongoing efficiencies expected from Stellare 2.0. Combined with our low cost of acquiring new customers, and the near-zero cost of originating subsequent loans due to our direct relationship with existing customers, we set ourselves apart from our peers by demonstrating the significant competitive advantage we hold as a direct-to-consumer lender. Our credit losses have moderated to 4.1% year to date, down from the 4.2% reported for the first half of the financial year to December 2023. We expect to see this trend continuing with the loans originated on our newer Australian scorecard, implemented over 20 months ago, now making up the majority of the loan book and with 90+ day arrears remaining low at 67bps. As mentioned at the half year, the rapid increase in market interest rates has constrained many consumers, slowing growth, and driving increases in our cost of funds, to which we responded with increases to our lending rates. Our YTD 31 March 2024 portfolio Net Interest Income % has contracted to 8.8%, as funding costs have increased at a faster rate, however we are pleased to report 10% NIM on new lending in the current quarter, driving us back towards our 9%-10% target range. Finally, the rollout of our new Stellare 2.0 platform in Australia is progressing well, with ever growing numbers of customers enjoying the faster, more seamless experience that it offers. With the New Zealand rollout to follow in FY25, Stellare 2.0's enhanced automation will continue to drive our costs to serve even lower.

Outlook and Ambitions

Harmoney anticipates continued loan book growth in FY24, aiming for a net interest margin of 9% and a positive Cash NPAT. The company also aims for a 20% Cash Return on Equity run rate in FY25. With the successful rollout of Stellare 2.0 in Australia and plans for New Zealand in FY25, Harmoney is focused on driving efficiencies and maintaining its competitive advantage as a direct-to-consumer lender. Despite challenges in the market, the company remains optimistic about taking advantage of improving market conditions in the coming period.