Pepper Money (PPM) H2 2025 earnings summary

Executive summary

• Achieved record originations of AUD 10.3 billion (+47%) and total AUM of AUD 21.8 billion (+14%), marking strong growth and profitability for the 25th anniversary.

• Mortgage originations reached AUD 6.8 billion (+66%), asset finance originations AUD 3.5 billion (+20%).

• Pro forma NPAT rose 7% year-over-year to AUD 104.8 million, with underlying profit before tax and loan loss expense up 13% to AUD 237.4 million.

• Fully franked dividends totaling AUD 0.267 per share (AUD 118.6 million) were declared, up 123% from 2024, delivering a 16.1% annualized yield.

• Cost-to-income ratio improved to 50.5% (down 4%), reflecting disciplined cost management.

Financial highlights

• Net interest margin (NIM) expanded to 2.05% (+8bps), with asset finance NIM at 2.85% (+30–31bps) and mortgages at 1.54% (down 4–12bps year-over-year).

• Total operating income increased 1% year-over-year to AUD 388.8 million.

• Loan loss expense rose 31% to AUD 90.6 million, mainly in asset finance, reflecting portfolio growth and model recalibration.

• Total loan loss provisions ended at AUD 138.6 million, with a coverage ratio of 0.83% of lending AUM.

• Net assets closed at AUD 869.9 million, up from AUD 855.6 million in December 2024.

Outlook and guidance

• Positioned for continued growth in 2026, leveraging business diversification, technology investment, and strong funding headroom.

• Entered 2026 with double-digit application growth and robust funding markets despite geopolitical issues.

• Interest rate volatility and potential RBA rate rises remain key macroeconomic risks.

• Ongoing focus on capturing market opportunities in prime and specialist lending segments and capital-light annuity streams.

• Mortgages customers remain resilient; asset finance customers face some pressure.