Will Wisr’s share price rise on disruption to traditional banks?

ASX-listed fintech Wisr could see its share price rise on the continued growth of loan origination, with its marketplace lending model providing an alternative to traditional banks. The company also claims to be ahead of the competition when it comes to gender representation, diversity and ESG investment.

• Wisr’s prime loan book doubles

According to its quarterly report, Wisr has seen continued growth in its loan book over the past two years despite the challenges brought by the Covid-19 pandemic. Its peer-to-peer lending model has proven itself to be an appealing alternative to traditional banks for high-quality borrowers.

The June quarter marked Wisr’s 24th consecutive quarter of growth in prime-credit loan origination, with a record $186 million in new lending. Loan origination increased 51% compared to the same period in 2021 and 18% compared to the preceding quarter. As of the end of the quarter, Wisr’s prime loan book had grown 106% compared to the same period last year to reach $780 million.

‘Despite current conditions, we’ve delivered a record $186M in new loans [and] continued our unbroken 24 quarters of loan growth,’ said Wisr Chief Executive Officer Anthony Nantes. Wisr’s fast-expanding loan book has supported rapid growth in its revenue levels. Revenue for the June quarter was $17.6 million, an increase of 81% compared to the same quarter in 2021 and a 13% increase compared to the preceding quarter.

The quality of Wisr’s loan book is solid, with the average credit score of borrowers standing at 801 as of the quarter.

• Wisr adjusts to higher interest rates

Strong growth in Wisr’s loan origination and revenue levels could support the P2P lender’s goal of achieving long-run profitability.

‘We have our sights set firmly on moving through breakeven and into sustainable profitability as our next goal,’ said Nantes.

Nantes highlighted efforts by Wisr to adapt to an environment of rising interest rates, in particular rising rates for the short-term instruments that are a key source of funding for the platform. The period from January 2022 to July 2022 saw an increase in the blended hedged Bank Bill Swap Rate (BBSW) of 93 basis points. In response to this increase, Wisr raised the weighted average yield of its front book origination by 130 points during between April to July 2022.

Nantes said that the adjustments would enable Wisr to maintain its Net Interest Margin (NIM) and protect the company’s profitability.

‘We’re in a solid position to absorb BBSW increases while still earning a very healthy NIM with multiple levers available, including raising interest rates on new loans,’ he said.

• ESG credentials could enhance appeal

Wisr, which traded as DirectMoney until 2018, is a non-bank lender that focuses on financial inclusion and providing consumers with a channel for the management of their credit scores. The company’s corporate mission is to bring ‘financial wellness to all Australians’.

Wisr is now highlighting its commitment to ESG investment and social inclusion when it comes to both its loan book and its workplace practices. The company’s branding as an ESG lender could enhance its appeal to Australian consumers. Wisr CSO Dr Lili Sussman believes Wisr’s ESG credentials to be a key driver of value creation over the long run.

‘Purpose-led companies outperform in long-term value creation because purpose unites employees and customers,’ Sussman said to Stockhead.

Sussman highlighted the strides that the company has made in terms of environmental friendliness and gender equity.

‘We’re a climate-positive and carbon-neutral workforce,’ Sussman said. ‘We don’t have a gender pay gap, and our board of directors comprises 40% of women, which is above the ASX 200 average of 34.6%.’