Morning, everyone, and Welcome to Plenti Group Limited's Second Quarter 2027 Trading Update. All participants are in a listen-only mode. Today's presenters are Adam Bennett, Chief Executive Officer, and Selena Verth, Chief Financial Officer. The presentation will be followed by a question and answer session. If you are an analyst 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. For other investors who would like to ask a question, please click the Q and A button at the bottom of your screen and type in your question. I will now hand over to Adam Bennett, Chief Executive Officer of Plenti. Please go ahead.
Thank you. Good morning and welcome to our shareholder call. I am delighted to once again share an outstanding set of results for the second quarter ending 30 September 2026. The entire Plenti team across all parts of our business has worked extremely hard on all fronts to deliver great results for our customers, our strategic partners and brokers, and for you, our investors. I am joined on the call with Selena Verth, our CFO, and together we will walk you through the results and ensure we leave some time for any questions that you might have. Plenti's results continue to demonstrate the leverage available in our business model, the value of our diverse and complementary distribution channels, and our differentiated data, technology, and credit capabilities.
Pleasingly, during quarter two, we have once again been able to maintain the momentum that we established during Q1, during which we wrote a record of AUD 536 million of loan originations to deliver another record quarter. Let us jump straight in, I will share some of the headline numbers before we drop into more detail on each element. We have really had an outstanding quarter on all of the metrics that matter, across loan originations, credit performance, and revenue. Let me share some highlights. Our Q2 loan originations were AUD 613 million, up 29% on PCP and 14% on Q1, with record loan originations set in three of our lending verticals. This took our loan book to AUD 3.5 billion, up 24% on PCP and 7% on prior quarter.
We also worked very hard and closely with the NAB to drive greater performance in the NAB powered by Plenti auto loan products and drove the portfolio up 22% on prior quarter, which took that portfolio to AUD 186 million. Pleasingly, we also launched a renewables referral offer to NAB customers. We once again saw excellent credit quality in the book with annualized net losses of 96 basis points and 90+ day arrears at 42 basis points, evidencing the quality of our loan book and highlighting our credit decisioning discipline. These are great results and reflect the hard work of everyone in the company, and it is a clear signal that our fast, easy, simple, and consistent lending proposition is really resonating with our customers.
Our proprietary technology continues to deliver for our brokers and strategic partners, and we still have room to grow within the large markets that we operate within. As I think everyone on the call knows, Plenti has a deliberate long-term strategy to be a large lender in big markets and all of our verticals, including consumer auto, commercial, renewables, and personal loans, all performed well. It was a very balanced result. Our consumer auto loan originations were AUD 180 million, up 7% on PCP and 20% on prior quarter. We continue to perform well in this large market and our auto lending proposition continues to resonate well.
Our commercial loan originations were AUD 129 million, up 35% on PCP and pretty similar to last quarter, which was a pleasing result given the seasonality in the Q1 result with 30 June for small businesses. We had record renewables loan originations at AUD 117 million. That was up 105% on PCP and 36% on the prior quarter. That was driven by strong demand across the country, spurred by federal and state government incentives and also, underlying growth in the transition to renewables across the entire country. We also saw pleasing volumes from the West Australian Government, WA Residential Battery Scheme that we administrate for and also the New South Wales Government's Home Energy Saver program.
Our personal loan originations were AUD 186 million, up 21% on PCP and underpinned by strong demand from both broker and direct, which comprises about 50/50 of our flow. I was very pleased to see the balanced performance across that vertical. I will now pass to Selena Verth, our CFO, to speak about her early impressions since joining the business and also our margins and credit performance. Over to you, Selena.
Thank you, Adam. I have been in the role for three months now, and I am really enjoying being back in lending and working with a business that is thriving. When you are new to a role, people always ask you what your key observations are. The three standouts to me are: one, the credit quality of the book. We have a diversified prime portfolio with an average Equifax score of 851. That quality shows up in the numbers, with 90-day arrears stable at 42 basis points and annualized net credit losses of 96 basis points. The macro environment is tough for both consumers and businesses, with rising unemployment, inflation, and interest costs. Our credit team closely monitor both leading and lagging indicators, and to date, we are not seeing that stress flow through to either our arrears or losses. Two, the quality of execution.
Strong execution is driving both momentum and sustainable growth. Loan originations were up 29% on the prior corresponding period, driving loan portfolio growth of 24%. That growth is coming from our diversified and expanding verticals. Our Horizon 2 strategy is well underway and is demonstrated in the results, with commercial up 35% and renewable energy up 105% on the prior corresponding period. We have refreshed our commercial auto offering, and we continue to innovate and partner in the renewable space. Importantly, we are growing sustainably, generating cash while delivering this growth. The strength of the funding program. Our funding program is mature and well supported, which is critical to supporting loan portfolio growth. Our latest ABS issuance demonstrates this. AUD 450 million personal loan and renewable energy transaction that we executed in October.
Despite busy and challenging markets, we achieved excellent pricing with our AAA notes at 115 basis point margin with reduced credit support. This result reflects our strong credit performance and a well-supported program that attracted a number of new investors. Adam has taken you through the originations and business performance, so the other area I will touch on is margins on new loan originations. In September, the market component of Plenti's funding costs rose by 40 basis points, reflecting the macro backdrop and market expectations of further RBA rate rises. As a result, the net interest margin on our loan originations for the quarter was 5.3%. This was in line with 1Q 2027, but below last year's overall portfolio rate of 5.5%. The drivers were different in each quarter.
1Q 2027 was impacted by mix, with large auto originations in June, while 2Q 2027 was impacted by rising funding costs. The majority of Plenti's loans are fixed, and we hedge the interest rate risk at origination. As funding costs increase, we move quickly to pass this through to customers with pricing changes in September and again in early October. We will provide a fuller financial update with our first 1H 2027 results on the 25th of November, and I look forward to discussing the financials in more detail then. I will now hand back to Adam to talk through the FY 2027 objectives.
Thanks, Selena. Just to close out the trading summary, our FY 2027 objectives remain unchanged. You will recall, the first is that we exit the year having done a AUD 600 million quarter. I am delighted that we have now done that in Q2. Second is our aspiration for a meaningful increase in cash PBT, which we feel we are on track for. Thirdly, we are committed to driving efficiency across the entire business and extracting leverage from our business model. We remain committed and on track to deliver our guidance of a cost to net margin of below 55%.
We are comfortable with all three of those guidance objectives. In summary, let me say, I am extremely pleased with the continued momentum in the business. It is once again driven by our diverse and complementary distribution channels across different verticals. That gives us a lot of flexibility in terms of how we think about the business and how we drive the institution that Selena alluded to. It also demonstrates when all parts of the company are working well together, we deliver great results. Selena and I will now pause and take any questions that might be on your minds.
Thank you, Adam. We will now take questions from participants. As a reminder, if you are an analyst 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 queue is reached, you will be unmuted and can ask your question directly. For other investors who would like to ask a question, please click the Q and A button at the bottom of your screen and type in your question. Questions will be selected for answering where they are broadly applicable to investors. If your question is not answered, we may follow up with you directly at the conclusion of today's webinar. I will now pause while the question queue is compiled. The first question comes from Tom Tweedie from Moelis. You may go ahead.
Good morning, team. Just want to check you can hear me.
Morning, Tom. We can.
Perfect. Thank you. Well done on a very strong quarterly. Just one question from me. Interested conceptually, just take into account your comments around the macro headwinds, but obviously we are not seeing anything in the underlying book or any stress there. How do you manage the business or the book at this stage of the credit cycle with consumers? Then also, that trade-off we have always got of searching for origination growth if we come down the credit curve, but also managing losses. How are you thinking about that over the next 12 months?
Yeah, maybe I will say a couple of words and then I will pass to Selena. Firstly, Tom, the reality is we have very small shares of very large markets. That is the most important, I guess, point for us to start on when we think about how we might continue our growth. At the full year, we did share a statistic that if we could get 1.7% of our total addressable markets across our verticals, that would translate to AUD 1 billion of lending. The first point I would say is that we are in large markets with small shares.
The second thing is we believe that the intersection of a prime customer who wants a great lending experience with a good rate, and it is fast, easy, simple and consistent, and it is supported by brokers who also acknowledge those dynamics, we believe that we can continue to grow our business in each of the four verticals that we operate within. Whilst the total market size or growth may shift a little bit, and I think that would be expected in the current macro environment, we still believe that we can get a disproportionate share of that market, whether it is kind of contracting a little bit or whether it is growing.
The last thing I would say is we have very disciplined credit decisioning capabilities. We have a strong ambition that we have been very clear to articulate around growth, but it is not growth at all costs. We continue to be very disciplined in terms of what is a prime borrower. They are very creditworthy, and we feel as though we are getting that balance right. Is there anything you wanted to add?
Yeah. I think I would just add for the portfolio itself, the credit team do a wonderful job of monitoring the portfolio. It is not just the lagging indicators. You know, ideally, delinquencies and losses are kind of lagging indicators, but we are also looking at leading indicators, things like hardship rates, early delinquency, voluntary surrenders, delinquency curves by vintage. We are looking at all of that to make sure that there are no signs in the portfolio that there are additional credit losses there.
Did that answer your question?
Yeah. Perfect. Thanks, guys. Thanks for taking my question.
Thanks, Tom.
The next question comes from Lachlan Woods, from Canaccord.
Hi, Adam. Hi, Selena. Thanks for taking it.
Hi, Lachlan.
Do you mind just talking us through the strong origination growth in NAB? Is that just as a result of the change in the commercial rates that you guys have done, or is it as a result of the launch of the renewable projects? Do you also just mind talking through, I guess, when that product was launched, just so we can think of the extra run rate?
The product was launched in September 2024, but if you recall, it was a very soft launch and did not really launch in earnest until March 2025. That is when it went live.
I think you are talking the renewables.
On the renewables. Sorry, I thought you meant the original auto product. Sorry, Lachlan. The renewables has just gone live in September. In answer to your question, Lachlan, we did a lot of work, and if you recall at the quarter one, we did talk about the contractually scheduled renegotiation of all the things with the NAB arrangements, and that was something that we put a lot of effort into with NAB, and both of us remain very committed to the growth of this product.
What you are seeing now is some of the benefits coming from that renegotiation coming through in terms of marketing, in terms of rollout in NAB into the assisted channels, which is their branch staff, their contact center staff. There are co-marketing initiatives from both us and from NAB. We are continuing to tune the customer journey for that product. There is a number of things that are really contributing to that growth, but we are really pleased to see the momentum. At AUD 186 million, that portfolio is starting to get to a more meaningful level for us, which is great.
Perfect. That is super helpful. Thanks, guys.
The next question comes from Ron Shamgar, and they ask, "The second quarter update disclosed revenue, but no update on profitability. Could you give some color on how cash PBT is for the first half?
Thanks for the question, Ron. You recall, we do not typically talk about cash PBT at our quarterly updates. We have traditionally done that at the half and at the full year. The only reason we did it last quarter was because of the debt sale. We thought that was sufficiently material to disclose that to the market. We will give a cash PBT update to the market for the full half, which is in end of November. As I said in my remarks, in terms of our objectives for FY 2027 being achieve a AUD 600 million quarter, meaningful increase in cash PBT, and commitments to an under 55% cost to net margin, we remain on track for all of those objectives.
The next question also comes from Ron Shamgar, and they ask, "When will the company consider paying dividends?
That is a really good question. I would answer that, and Selena will have some remarks on this as well. If you recall last year, we passed two very critical milestones for a business like ours. Number one, we consumed all of our carry forward tax losses. Whilst you do not celebrate becoming a taxpayer, essentially, we are celebrating becoming a taxpayer because it means that we have become a very vibrant, profitable business, and we are now paying tax on those profits. Secondly, we also became cash generative, where the surplus cash that we are generating is sufficient for us to invest in the ABS and warehouse structures in terms of the equity components that allow us to continue to grow our business.
As you would expect, we are having now ongoing conversations with our board around capital management. It is fair to say those conversations, which in the past have been somewhat hypothetical, are now becoming very real and regular because we have passed through those milestones, as I mentioned. We will talk more about that at the half, but I will pass to Selena to step out and answer.
Yeah. As Adam said, we are in a really good position. The business has sustainable growth. We are generating cash. We have enough cash to grow the portfolio. You need more equity as you grow the loan portfolio, and then we generate additional cash after that. We are looking at, as you do, all capital components of the structure, whether it is debt, equity, all those sorts of things, and also organic growth. But we will update you at the half.
The next question comes from Lachlan Scott, and they ask, "Congrats on achieving the quarterly originations target two quarters early. How should we think about sustaining this run rate from here in terms of quarterly seasonality or any temporary strength which benefited this quarter?
Yeah, that's a very good question. I'd answer it by saying we remain committed to growth, as I mentioned in my opening remarks. We realize that for Plenti to be Australia's best lender, and that is our aspiration, to be the best lender as judged by our customers, our employees, our owners, we need to get bigger. But it can't just be size for its own sake. We are absolutely committed to profitable growth, and we're very comfortable with our momentum for Q1 and Q2. That really is a function of our execution that Selena mentioned around our business development teams. We continue to invest in growing them out and improving their sales efficiency and effectiveness. We'll add other salespeople if we feel as though the returns from an addition of a salesperson is good.
We've also tuned our fulfillment capability, so we're continuing to be able to do more fulfillment with less people. Our efficiency is really on track. We remain committed, and I would acknowledge this is only the half, and in my experience, at the half, you get oranges, not trophies. We're really committed to having a good second half and making sure we have a really good financial year.
The next question comes from Tim Curtis, and they ask, "Can you give us a bit more background about what makes up the commercial vertical? Is it primarily auto?
The answer to that is yes. It is primarily auto. To give you a little bit of flavor to that, we've done commercial auto for some time. But we have refreshed and relaunched that as a product into the market as part of our Horizon growth strategy. We recognized we needed a dedicated product with all of the features and functionality that you would expect in a commercial product, like early termination fees, things like that. We also have found and are now dealing with a brand new ecosystem of commercially focused brokers. We have a dedicated business development team in the commercial business. We have a dedicated underwriting team and where it makes sense, dedicated operational functions to support that vertical. We have started with commercial auto.
We are now also doing a small number of commercial trucks, but we are also actively thinking through what would it take to push into the adjacencies of things like commercial equipment finance. It is a very vibrant vertical. We think there is a lot of growth available from it. It is early days in terms of the refresh. I am delighted with the momentum that we are building in that, and that is something that we are really focused on.
Thank you, Adam. As there are no further questions, we will now conclude the webinar. Thank you for joining Plenti Group Limited's second quarter 2027 trading update. Good morning.
Let me just say thank you for dialing in and for your interest and support. Thank you.