Harmoney secures its third funding line

WELLINGTON: Online lender Harmoney has secured a $A105 million ($NZ110 million) funding line — its third funding line since moving away from a peertopeer lending model.

The assetbacked securitisation had taken over a pool of its Australian consumer loans and would result in a material reduction in its cost of funds, the company told the NZX.

Harmoney chief executive David Stevens said the move was just the start of its assetbacked securitisation programme.

‘‘Assuming similar market conditions, we anticipate a New Zealand securitisation in early calendar year 2022.

‘‘Given the size of the New

Zealand loan book, this is expected to be a significantly larger ABS [assetbacked securitisation] transaction.’’

Harmoney already has two other funding warehouses provided by banks.

Mr Stevens said the securitisation had allowed it to test the market with its lending model.

‘‘The results we have achieved provide clear validation of the quality of our Australian loan book, materially reduce our cost of funding, underpin a significant release of capital and diversify our funding sources.’’

Harmoney duallisted on the NZX and ASX on November 19 last year following a $A92.5 million initial public offer priced at $A3.50 a share.

Its shares fell as low as $1.38 on the NZX in June this year but have recovered a little since then and closed at $1.99 yesterday.

In August, the company revealed a cash loss of $A400,000 for the year to June 30, compared with the $A2.8 million in the black for its prior financial year.

It made a statutory loss of $A27 million, compared with $A15.37 million in its 2020 financial year.

Harmoney’s income fell 8% to $79.1 million as its average loan book was down due to the effect of the Covid19 pandemic.

However, its net lending margin rose from 5.8% to 6.8% due to lower credit losses and funding costs.

Mr Stevens said its 2021 financial year was a tale of two halves, with a significant recovery in loan originations in the second half from the impacts of Covid19 in the first half.

Harmoney also announced a settlement agreement with the Commerce Commission in early August.

It will repay $7 million to 37,000 customers after admitting its platform fees were unreasonable.

The commission launched legal action against Harmoney in 2016, alleging its loan establishment fee was actually a credit fee and exceeded the amount of reasonable costs under the Credit Contracts and Consumer Finance Act 2003.

The case was due to go to the High Court last month but was settled out of court. —