Solvar (SVR) H1 2025 earnings summary

Executive summary

• Normalised NPAT rose 26.9% to $18.5 million and statutory NPAT increased 27.9% to $16.9 million, reflecting strong profit growth and a significant turnaround.

• Technology upgrades, including ISO 27001 certification, and consolidation of IT platforms enhanced productivity and cybersecurity.

• Launched a dedicated commercial lending business unit, with contributions expected from FY2026.

• Strategic focus on cost management, regulatory matters, and simplification, including closure of dormant subsidiaries and NZ lending exit.

• Share buyback program reduced shares on issue, supporting a 30% increase in EPS to 8.2 cents.

Financial highlights

• Interest income up 4.6% year-over-year to $93.1 million in Australia, with group interest income at $108.6 million.

• Earnings per share increased 30% to 8.2 cents; interim dividend up 20% to 6.0 cents per share, fully franked.

• Loan book grew 7.1% year-over-year to $824.7 million in Australia; group loan book at $930.4 million.

• Bad debt rate at 4.0% (annualised), within target range; group bad debt rate declined by 0.3% to 4.1%.

• Free cash decreased due to funding loan book growth; $132.6 million in funding headroom available.

Outlook and guidance

• FY25 normalised NPAT guidance reiterated at $34 million, with double-digit loan book growth targeted for FY2026.

• Bad debt expected to remain within 3.5%-4.5% target range.

• Commercial lending unit to contribute from FY2026; no material impact in FY2025.

• Money3 back book expected to benefit from rate-cutting cycle.

• Australian loan book expected to continue disciplined growth in H2 FY25.