Plenti posts another record quarter as it nears billion dollar milestone and profitability
Plenti had another record quarter, and its CEO said it would be the first fintech to reach a billion dollar loan portfolio.
Fintech lender Plenti Group (ASX: PLT) has just delivered another record quarter.
The company’s loan origination portfolio increased 140% to $ 256.4 million in the second quarter, compared to the same quarter last year.
Loan origins in September also hit record highs at $ 95.5 million, 159% above September 2020 figures.
This quarter continued the strong run for the company, after the record numbers of the previous quarter when the loan portfolio grew by 216%.
It has been a story of rapid growth for Plenti, where lending has grown exponentially from just $ 385 million in June 2020 to $ 915 million today.
The company operates in three leading verticals: auto loans, renewable energy and personal loans.
All three segments posted record growth in the quarter, with the auto loan category again performing best.
Storer met with Plenti CEO Daniel Foggo to ask him about the latest results.
“Our growth is broad. I think that’s really representative of our market share gain, ”Foggo said.
He said large incumbents like banks are struggling to meet customer needs, which has allowed Plenti to replace them and gain market share.
Positioned for future growth
Despite the record run, Foggo says Plenti is still scratching the surface in terms of market potential.
“We are still at the beginning of the opportunity, and our market share is still only 2-3% in the automotive market,” he told Stockhead.
Growth in loan origination from the prior quarter was achieved in all states and territories except ACT, due to restrictions.
And what drives customers to the Plenti platform?
“The simplicity of our technology. Our user interface is simpler and more intuitive whether you are a loan broker working with us or a borrower coming directly to us for a loan, ”said Foggo.
He said the Plenti platform offers better processing times and a more customer-centric offering compared to other lenders. It has also enabled the company to better serve its loan brokers.
“Now is a good time to be in the market with a better deal, as people are looking for an alternative to these big incumbents who are leaving the market or who just cannot serve their customers properly. “
Foggo also expects growth to continue as people gradually come out of lockdowns.
There is a backlog of demand for new cars and automakers are struggling to meet pent-up demand, he said.
“So we see the opportunity for continued growth out of the deadlock over the next few months as it will be easier for people to go to a dealership and buy a car.”
In the personal loan segment, Foggo sees an accelerating trend in purchases of leisure goods.
“It could be jet skis or a trailer, something that improves their lives.”
Plenti, he said, is in a great position to reopen as the demand for credit will increase in the next quarter.
Path to profitability
The rapid growth of Plenti’s loan portfolio, which more than doubled in just over a year, was supported by its first asset-backed securities (ABS) financing of $ 306.3 million, completed in August.
The ABS package was rated by the multinational credit rating agency Moody’s, which applied an AAA rating to nearly 90% (87.8%) of the underlying portfolio.
This allowed the company to lock in debt financing with low interest rates – just 0.97% above the benchmark one-month banknote exchange rate (BBSW).
But the low cost of financing also reflects Plenti’s exceptional credit performance.
In the last quarter, annualized net losses for the quarter were around 70 basis points, reflecting the key attributes of its loan portfolio and the strong underlying characteristics of borrowers.
Its arrears over 90 days were 26 basis points at the end of the quarter, compared to 35 basis points at the end of June 2020.
Strong growth coupled with low-cost financing accelerated the company’s target timelines to reach a billion dollar loan portfolio, while achieving NPAT cash profitability by December 2021.
“Our loan portfolio of $ 915 million reached at the end of the quarter gives us confidence to reach a loan portfolio of $ 1 billion by the end of the year,” said Foggo.
Foggo says Plenti will be the first fintech consumer lender to cross the billion dollar mark.
The company also expects to achieve profitability during this quarter.
“This is a very important step for our equity investors. We’ve been in the lending business for seven years, and getting to profitability is a really exciting step.
“And I think from an equity investor perspective, when you have a high growth company with a lot of operational leverage, it could turn out to be a really interesting story.”
This article was developed in collaboration with Plenti, a Stockhead advertiser at the time of publication.
This article is not advice on financial products. You should consider getting independent advice before making any financial decisions.