Loan Originations Spike For Listed Australian Online Lender Prospa

Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a neowealth disruptor in Australia

Last year we covered the successful IPO of local fintech success story Prospa, an early player in the online lending space in Australia. The company debuted on the Australian Stock Exchange in June of 2019, taking off at $4.50, a significant uplift on the IPO offer price of $3.78.  As often happens in the early stages of a company’s public life, the share price has had a bumpy ride since listing, and currently trades around the AU $1.80 mark. Last week the company released its HY20 results, offering investors deeper insight into its operations, and drivers for future growth.

The numbers are genuinely positive in many directions.

In the first half of 2020, (July 2019 – December 2019) the company had a 37% uplift in originations, with $306.8 million in loans written over the period. Average gross loans were also up 46% on the prior year, coming in at $428.9 million.

These numbers contributed to a revenue uplift of 12%, with the online lender booking $75.6 million in revenue. EBITDA for the half sat at $4.3 million, 7% ahead of prior guidance. NPAT was $551,000, and was a significant turnaround from a $3 million loss in the prior corresponding period.

For those looking to benchmark businesses like Prospa against its peers, there are a few other interesting data points in its half year report that help paint a picture of the lender.

Average loan size sits at roughly $30K, with an average term of 14.5 months. The company’s second product, a line of credit for SMEs, has an average drawn balance of $18,500. The company has also begun diversification into payments, launching a B2B payments solution called ProspaPay. The product is designed to facilitate trade transactions up to $20,000. So far the average payment amount is $2400.

Faced with the coronavirus and a number of other economic headwinds blowing in to the continent hard and fast from China, what lies ahead in 2020 for many businesses, including fintech, is anyone’s guess. The full effects of the devastating bushfires that ravaged much of Australia’s lower east coast are still yet to be felt by many businesses. As a result, Prospa has increased its provision rate by 0.1% to cover any potential losses stemming from the fire season.

Businesses will inevitably face many economic ups and downs, and we are now entering into far bleaker market conditions then those that have buoyed global markets for over a decade now. These conditions are always a true merit test for good business fundamentals, and will give us a good insight into how many fintech businesses, like Prospa, will perform into the future.

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