Harmoney hopes to lend billion dollars in Australia

AUCKLAND: Online lender Harmoney has laid out ambitious plans to lend a billion dollars a year to Australian consumers in a major push across the Tasman.

The New Zealand finance company revealed a $10.5 million statutory net loss in its first halfyear result as a listed company on Wednesday.

The loss was a 20% improvement from the $13 million loss it made in the six months to December 2019.

The company’s pro forma results — its preferred method of measurement which removes the impact of nonrecurring items and aligns the accounting treatment for all its loans, shows it made a cash profit after tax of $1.24 million — a $4 million improvement on the prior comparable period.

Harmoney listed at $A3.50 or $NZ3.57 but its shares have fallen markedly since then, touching a low of $2.28 on Monday.

Harmoney chief financial officer Simon Ward said its income was flat over the six months to December 31 at $41.55 million despite the period being affected by Covid19.

Loan originations were down 28% to $193.7 million as it took a more conservative approach to lending.

Expected credit loss provisions increased from 4.4% to 5.7% due to a higher Covidrelated overlay.

Its marketing expenses dropped as it spent more time focusing on lending to existing customers.

Mr Ward said its move away from using a peertopeer lending model to warehouse funding had also lowered its interest expenses by 12% to $2.2 million.

Harmoney chief executive David Stevens outlined the business’ growth plans.

He said the size of the personal lending market in Australia was $A150 billion whereas New Zealand was $15 billion.

Mr Stevens said Harmoney was tapping into that sweet spot of convenience and efficient services at a time when online players were gaining on the banks whose share of the personal lending market had fallen from 90% in 2015 to 50% in 2018.

He also pointed to the rise in online purchasing which had gone up 113% since 2015 at the expense of branch sales.

Since launch in 2014, the company has done $1.9 billion in loan originations, largely in New Zealand.

Mr Stevens said before releasing a new technology platform called Libra 1.7 into Australia on February 10 it had a 25% conversion rate but two weeks under the new tool had seen its loan conversion rate rise to 100%. Harmoney was planning an upgrade to Libra before the end of its financial year in June 30. Longer term it expects this to settle at about 80%. — The New Zealand Herald