Good morning, everyone, and welcome to Plenti Group Limited's full year 2024 results presentation. All participants are in a listen-only mode. Today's presenters are Daniel Foggo, Chief Executive Officer, and Miles Drury, Chief Financial Officer. The presentation will be followed by a question and answer session. If you're an analyst, broker, or institutional investor, and you wish to be added to the question queue, please press the Raise Hand button visible at the bottom of your screen. I will now hand over to Daniel Foggo, Chief Executive Officer of Plenti. Please go ahead.
Morning, and thank you for joining us. I'm Daniel Foggo. I'm joined by Miles Drury, our CFO. We're delighted to present our FY 2024 results today. If you can take three messages from this presentation, I hope they'll be, firstly, Plenti further differentiated itself over the last year, having continued to grow and drive cash NPAT growth at a time when many lenders have gone backwards. Secondly, Plenti has transformed its opportunity set over the last year, having signed a strategic partnership with NAB and completed core implementation work for the first NAB powered by Plenti product. Thirdly, Plenti has further demonstrated the benefits of its technology-led, platform-based business model by significantly reducing its cost to income metrics and providing further evidence of the profitability it can achieve as it scales. Miles, if you could put the presentation up. Thank you.
Just moving to page two, to remind you of Plenti's business model. Plenti is a technology-led lending and credit investment business. We're differentiated primarily by our technology. We've built our own end-to-end technology platform, which allows us to deliver fast and simple finance experiences to our customers and partners. We're also differentiated by our diversity across our lending verticals and our funding, which includes retail investor funding. We are proud of our track record. We've consistently achieved strong growth since we launched in 2014. We're a prime lender, which has a long track record for delivering strong credit outcomes, and we're cash NPAT positive. Our mission is to build Australia's best lender, and as we achieve this, we can build market leadership positions in the lending channels we operate. We can build real scale, and we can deliver significant profitability.
Moving to page 5, our full year highlights. We delivered a solid all-round performance in a year, which was very focused on execution. On scale, we funded AUD 1.2 billion, which was up 6% on PCP, and our loan book closed at AUD 2.1 billion, actually just shy of AUD 2.15 billion. We've got to a scale now where we have separated ourselves from the broader fintech market in terms of size, and this is helping us to attract more significant partners. On P&L metrics, we generated AUD 211 million of revenue and AUD 6.1 million in Cash NPAT, despite some headwinds on profitability. Our Cash NPAT result was supported by the, by our cost to income ratio, reducing from 34.2% in FY 2023 to 26.5% in FY 2024.
On credit, we delivered a pleasing result with our net loss rate only a little above 1%. Maybe most importantly, on this page, strategically, we had a very productive year, having entered a strategic partnership with NAB. This brings together one of Australia's largest and most trusted financial institutions, with Australia's most innovative and awarded financial technology companies. We are confident this strategic partnership can accelerate our scale and profitability ambitions. Needless to say, a lot of our focus over the last year has been, firstly, on agreeing terms with NAB, and secondly, on getting on and implementing our first product, which is a car loan, which I'll talk to shortly. Briefly, on page 6, we grew our loan portfolio 21% over the year, although the average portfolio growth was somewhat higher at 28%.
This, along with higher borrow rates, helped to grow our revenue 40%... 47% year-on-year. Moving to page 7, on profitability, we grew our Cash NPAT despite various periods where interest rates and therefore our funding costs increased, putting pressure on the profitability on new loan originations. And also higher credit losses as industry-wide rates moved back to what might be described as more typical levels, following lower loss levels during the COVID period. Again, what really underpinned our growth in Cash NPAT was the operational leverage inherent in our technology-led business model. Now, moving to our operational performance for FY 2024. On page 10, we show progress in our car finance business. This has become a more competitive market over the last two years, as some of the lenders who are getting squeezed in the mortgage market have focused more on this higher-yielding product.
But I'm pleased with how our team has successfully optimized our lending volumes against our NIMs and credit appetite, while continuing to drive 23% growth in our car loan book. There are a few areas of significant progress that I'd like to highlight. First, we've started to lay the foundations for moving into the car dealer channel. This is the largest car finance channel, so it's a very natural progression for our business. And secondly, as I mentioned, a lot of our focus of the business over the last year, especially across our automotive technology team, has been on the launch of our first product with NAB, the NAB powered by Plenti car loan, which I'll talk to you shortly. Moving to page 11. On renewable energy.
Renewable energy achieved our best growth on the prior comparable period, with loan originations up 31% and our loan book growing 36%. We have continued to take share from what were the two incumbents when we entered the market. Certainly, our GreenConnect platform has been a key driver of this growth. On page 12, we provide highlights in relation to our personal lending business. We continue to gain outstanding balance share in what remains a very fragmented market. Our gains have been driven, in particular, by the continual improvement in our direct-to-consumer lending capabilities, with direct-to-consumer lending volumes up 17% year-on-year. Overall, our personal loan book grew 13% year-on-year. Moving to page 13, as I mentioned, Plenti is differentiated by its proprietary end-to-end technology platform.
Our platform is built and maintained in-house by over 50 product and technology staff. Our technology advantage helps us deliver better customer experiences, build great partnerships, and operate even more efficiently. Over the last year, there have been two areas of focus. First, the delivery of the NAB powered by Plenti car loan. And secondly, continuing to drive operating efficiency through increased automation, saving on payments, and other constant enhancements. In total, we invested over AUD 12 million in technology in the year. Our Cash NPAT is after these costs, as it is all expensed through our P&L. On page 14, I come back to our GreenConnect platform. The function of this platform is well described on the screen. It essentially offers a one-stop shop for our referral partners to offer a full suite of renewable products, including VPP connections and our finance.
The launch of GreenConnect just over a year ago has been very successful. Not only have we made it easier for households to reduce their power bills and carbon footprint, but we have built partnerships with large players and taken a greater share of the finance market. Accordingly, we continue to invest in GreenConnect. Moving to operating metrics on page 15. I think the subtitle says it all here. I draw your attention to our cost to net interest income ratio, which I think is the most relevant metric, as it is not distorted by interest rate movements, and really shows what is left to cover credit losses and provide profit. On page 16, we show credit information.
As I mentioned, our net loss rate for the year was 1.06%, up from the very low 0.68% the prior year. We are able to achieve relatively low loss rates because of our strong credit pricing and underwriting capabilities. The credit strength of our average borrower is indicated on, by the chart on the right, which shows an average credit score substantially higher than the population average. And most importantly, 70% of our loan portfolio now is lower risk, secured car loans or renewable energy loans, and this is up from only 15% at the start of the chart on the left, in September 2018. Moving to page 18, regarding our strategic partnership with NAB. As a recap, we signed a strategic partnership agreement with NAB at the end of November.
This was coupled with an equity investment agreement, which allows NAB to acquire, via placements and on-market purchases, up to 15% of Plenti shares based on achievement of certain milestones. The strategic partnership will see us work together on to launch a series of either co-branded or Plenti unbranded products. The distribution will be initially focused on NAB's customer base of over 5 million personal banking customers. The first product we will launch is a co-branded car loan. This product is capital light and low risk for Plenti, as NAB will fund the loans and absorb the credit losses. The second product is making our renewable energy finance available to NAB customers. Moving to page 20, we've provided a status update on our NAB powered by Plenti car loan. Implementation work has been completed.
This includes a co-branded customer journey, an integration with NAB systems, and the establishment of operational processes. Testing is now being finalized, and the phase one launch to NAB staff is expected this quarter. The product will then be available to NAB staff via online banking in the NAB and mobile app. This phase will provide an opportunity to enhance customer experiences and operations before our broader launch. This phase one launch will be announced via the ASX. I'll now pass to Miles to explain our financial performance in more detail.
Thanks, Dan. Overall, FY 2024 was a good year from a financial point of view, with the Cash NPAT results being the highlight. On slide 22, we can see the headlines for the year. We grew the portfolio materially, up an average 28%, which drove substantial revenue growth. With our focus on loan profitability, we maintained portfolio net interest margin. Costs were well controlled at 14%, and while credit losses were clearly up year-on-year, as we'd indicated they would be, the result was very much in line with expectations. The combination of these factors drove the 36% increase in Cash NPAT. We continued to generate positive cash flow from operations, with our need for capital to support growth in warehouse facilities offset by release of capital from ABS transactions.
The overall funding side of the business continues to operate well on a BAU basis, as we continue to scale and diversify the providers of capital to our business. Moving to slide 23. Maintaining stable net interest margin at 5.2% for the first half into the second half, and also for FY 2024 against FY 2023, was a good achievement and reflected a lot of discipline in pricing and responsiveness when funding costs did change. We faced rising market funding costs through most of the year, which makes it harder to maintain margins, and the business did a good job to face into and respond to this. As usual, we also provide some visibility of exit rate margins, which are sitting around 5.5%.
As we note on the right, a new origination rate at around that level is consistent with maintaining broadly stable portfolio margins, given the faster amortization rates of higher margin products. On slide 24, on credit, it's generally not considered a highlight when a cost line item goes up by 99% year-on-year. But I think it'd be fair to say that the average net loss rate of 1.06% was one that many people would not have thought we could have delivered when we started the year, and reflected well on the quality of the credit and the credit processes within Plenti. We've been clearly telegraphing for some time that loss rates would return to more this type of level, so it was not a surprise to see how this played out and very much within our expectations.
We also provide the credit loss numbers for the last two months' actuals at 1.6%. While we will see how the year evolves, we don't expect the result at quite the FY 2024 level for the coming year, and the 1.6 number is a better indication of the current credit environment. This is also reflected in the higher ECL value of March, noting that there were probably a couple of period-end factors which elevated ECL a bit more than underlying credit would have suggested. On page 25 and the P&L, I've already highlighted the key dynamics that drove the meaningful improvement in cash NPAT. Solid loan book growth and revenue growth, growth in margin dollars, given stable margin percentage with controlled costs and losses well managed.
Total revenue hit AUD 211 million, while net income was AUD 188 million. If you deduct funding costs, you get an increase in dollar margin of AUD 20.4 million or 32% growth. Overall, operating expenses grew AUD 7 million or 14% year-on-year, which was materially less than that net income growth. Obviously, we did see an acceleration in credit losses with a year-on-year increase of AUD 10.4 million. Together with a slight increase in corporate funding costs, mainly due to increased BBSW, this drove the AUD 6.1 million cash NPAT result. I do note that statutory profit was impacted by a large swing in the income tax line.
I've highlighted before that this is something of an accounting anomaly to do with hedging changes on the balance sheet and will net to approximately zero through time. So we don't focus on the line. We back it out off the cash NPAT result. Slide 26 talks to our progress on meeting our objectives of AUD 25 million of cost efficiency as we double the portfolio from AUD 1.5 billion to AUD 3 billion. The good news here, as you can see on the slide, is that we're on track towards this result with the numbers we've reported over the last 3 halves. And finally, on slide 27, just talking about funding. It was very much more of the same as we continued to leverage our diverse sources of capital to support business growth.
All warehouses have been extended as scheduled, and we scale up and down the warehouses depending on need. On the ABS front, we completed 2 further deals, totaling AUD 781 million in the year, and have continued to broaden the investor base. It would be fair to say that getting ABS deals done has become incrementally easier for us as we've continued to become more established with a longer track record of issuance. With the deal we just completed in the last month, our ABS issuance is now over AUD 2.5 billion. In relation to corporate funding, we continue to be operating cash flow positive for the year. With material loan book growth, we did need to invest capital in our warehouses, but we've been able to fund that by recycling of capital from completed ABS transactions.
Overall, our available cash balance increased slightly year-on-year, and we retained additional headroom in our corporate debt facility, which we've not drawn on since August 2023. With that, I'll hand back to Dan.
Thanks, Miles. Moving to page 29, we show our ambitions across growth, profitability, and efficiency. As some of you will be aware, we like to provide reasonably general objectives at the start of the year or the financial year, and then clarify and refine these throughout the year. In terms of scale, we expect to grow our loan originations and loan portfolio. In terms of profitability, we expect to grow cash NPAT, and in terms of efficiency, we expect to reduce our cost to income ratio to below 24%. And there's no doubt the faster we can grow, the lower we can get our cost to income ratio as we leverage our technology advantages. But overall, we are very optimistic about the year ahead. We have a lot of exciting initiatives coming to fruition, and we are well-placed to drive growth and profitability.
So in summary, I reiterate the points I made in the introduction. Firstly, Plenti has further differentiated itself over the last year, having continued to grow and drive cash NPAT growth at a time when many lenders have gone backwards. And secondly, Plenti has transformed its opportunity set, having signed a strategic partnership with NAB and completed core implementation work for the first NAB Powered by Plenti product. And thirdly, Plenti has further demonstrated the benefits of its technology-led, platform-based business model by significantly reducing its cost to income metrics and providing evidence of the profitability we can achieve as Plenti scales further. Thank you, Daniel.
... We'll now take questions from participants. As a reminder, if you're an analyst, institutional investor, or broker, and you wish to be added to the question queue, please press the Raise Hand button visible at the bottom of your screen. When your position in the queue is reached, you'll be unmuted and can ask your question directly. I'll now pause while the question queue is compiled. The first question comes from Tom Camilleri. You may go ahead.
Morning, Dan and Miles. Congratulations on a strong set of numbers in a pretty volatile environment. My question, given your key metrics were pre-released, just around the guidance that you've put forward. So it implies upside to where we're currently sitting from a loan book growth and a cost to income perspective. Just firstly, on that cost to income ratio, is that, I guess, as a full year target for cost to income to be sub 24% FY 2025, or is that on a run-rate basis? And then could you also just go through, I guess, the key lines where you expect the most operating leverage in the business this year?
Sure. So yeah, that's a full year 2025 average that we're talking about rather than obviously, if that's the average, hopefully by the end of the year will be lower than that. In terms of sort of, you know, where we'd see operating leverage, you actually saw a degree of sort of consistency in the different areas. So I think, yeah, we'd probably see operating leverage across most of the different cost line items in the business on a reasonably consistent basis. Part of that is going to be a little bit determined by growth in NAB. Obviously, the more that we grow volume there, that tends to be more operations heavy. There's not a lot of not as much sort of marketing that we're spending.
Given it's sort of NAB that's doing the upfront marketing. And then, look, technology, and I know we'll continue to invest in that, but as always, you know, we don't necessarily see that sort of a step change in those numbers.
Thanks. That's great. And then maybe just going one step further, so you're talking about, like, you've continued to talk about a loan book of AUD 3 billion as kind of your longer term ambitions. Are you, are you fully scaled now from a staffing and technology perspective to meet that ambition? Or do you think you have to load in any sort of material costs in the next couple of years to get there?
I don't think it's material. I think it's sort of incremental and in some ways that chart that we showed of sort of the cost progression with the loan book growth is actually, you know, an interesting guide. If I'm honest, I didn't expect it to be quite that close to the trend line. But look, as obviously as we both... It depends on origination growth and loan book growth. The more that we're putting through the machine, obviously that takes you know staff to operate it and, you know, technology resource, but also, as the larger the loan book is, you know, areas like collections, customer service, are more driven by size of loan book.
It's going to depend both on sort of speed of growth and origination, but also, you know, ultimate size of loan book. No, we'll continue to scale somewhat.
A constant program of just driving efficiencies through better use of technology. So that's, you know, an ongoing focus.
That's great. Thanks for that. And then, sorry, just lastly, just a clarification question. The AUD 3 billion loan book, does that include your NAB partnership, written loans, or do you see that as excluding the NAB, written loans?
We would include NAB in that. Obviously, you know, whether you write a loan to NAB and maintain it or write a loan on our own book, it's actually very similar. So the cost structure, as I said, there are nuances, but it's broadly the same. So yes, we'd include that. We'll obviously report them separately, but-
Yeah
... in terms of that metric, you'd include it in the AUD 3 billion. I guess, you know, hopefully it just accelerates our you know, our journey to get to that number.
Yeah, that's great. And then maybe could you give us, I guess, an indication on timing? So are we, I guess, is the AUD 3 billion, like, just from our side of the fence, like, is AUD 3 billion kind of a 3-year, a 5-year, or a 7-year sort of ambition when we're doing our modeling on our side of the fence?
I don't think we can be too precise on that, as I'm sure you'll appreciate. Look, I think it's fair to say, we've got a track record of consistently driving good loan portfolio growth. Obviously, over the last 18 months or so, we've focused on getting the right mix between originations and margin and credit appetite. But we're clearly positioned to, you know, drive faster origination growth, partly through the partnership with NAB. So we can't be specific, but, you know, we're not investing in technology and to understand still.
We certainly hope it's not at the end of those sorts of numbers you're talking about, 'cause, you know, my beard's gray enough as it is, and so no one will be sitting here, you know, 7 years and only AUD 3 billion, it's not, not worth the effort.
Great. Just one last one from me, guys. We did speak pretty extensively at the fourth quarter about, I guess, Macquarie's exit of automotive lending. Has, I guess, initial green shoots from your end started to appear from a, I guess, in an origination perspective, but then also a competition perspective? If you can comment on that?
I think it certainly improved demand dynamics in the automotive market, so we certainly see there's more opportunity for growth there as a consequence of Macquarie exiting. I think we probably haven't nailed our operational positioning to take advantage of that. So I think as we said at the time, there'll be a bit of a lead-up to us getting the benefit from that, and that's sort of playing out more or less as we expected.
Great. Thanks, guys. I'll drop back.
Thanks, Tom.
As there are no further questions, we'll now conclude the webinar. Thank you for joining Plenti Group Limited's full year 24 results presentation. Good morning.