Solvar (SVR) H2 2025 earnings summary

Executive summary

• Normalised NPAT rose 17.4% to $34.1 million, with statutory NPAT up 84.4% to $31.4 million, driven by disciplined lending, cost reductions, and strategic investments.

• Launched Bennji, a new commercial lending channel targeting Australia's $22bn market, expected to materially contribute to loan book growth.

• Completed a 14.3 million share buyback (6.8% of register), enhancing EPS and capital management.

• Achieved ISO 27001 certification, enhancing cyber resilience and customer data protection.

• Streamlined operations by consolidating loan management systems and optimizing technology.

Financial highlights

• Australian loan book grew 5.3% to $832.7 million; group loan book contracted 2.2% to $910.1 million due to New Zealand performance.

• Interest income in Australia increased 1.4% to $180.3 million; group interest income fell 6.1% to $207.4 million.

• Net profit after tax increased 70% year-over-year, with normalized NPAT at $34.1 million and statutory NPAT at $31.4 million.

• Full year dividend of 14.0 cents per share, up 40% year-over-year, fully franked.

• Bad debts remained within the 3.5%-4.5% target range, with AFS bad debts under 1%.

Outlook and guidance

• Loan book growth expected in FY 2026, especially in Australian operations and Bennji, with focus on improving credit quality.

• Bad debt ratio forecasted to remain within 3.5%-4.5%; dividend payout ratio to be maintained.

• Easing cost of living pressures and RBA rate cuts anticipated to provide tailwinds.

• New Zealand loan book expected to reduce to ~$30 million by June 2026 as new lending ceases.

• Management confident in FY26, focusing on funding alternatives in specialized markets.