Plenti's share price could rise on rapid loan growth

ASX-listed fintech Plenti (ASX: PLT) has seen robust growth in revenues on the back of a fast-expanding loan portfolio.

The company has also focused on maintaining the quality of its loan portfolio, achieving ongoing gains in its Equifax credit score.

Loan portfolio crosses $2 billion threshold

PLT reports that its loan portfolio increased to $1.99 billion for the September quarter, marking a 29% rise compared to the same period last year as well as a 5% increase compared to the June quarter.

The company's loan portfolio has risen further since the end of the third quarter, crossing the $2 billion threshold in the first week of October.

Loan originations in the September quarter were $292 million, for a 9% increase compared to the previous comparable period. The figure was nonetheless 12% beneath the record volume of loan originations posted in the preceding quarter.

Ongoing growth in PLT's loan originations could bode well for revenue levels. Growth in PLT's loan portfolio helped drive even larger gains in its revenue levels during the last financial year.

In FY23 PLT's loan portfolio posted a 36% expansion to reach $1.8 billion. Revenue for the same period saw a 62% increase to reach $143 million.

Green loans hit record high

PLT bills itself as a consumer lender with a focus on the automotive and renewable energy sectors.

Origination of automotive loans in the September quarter rose 10% compared to the same period last year to hit $154 million, while still declining on the record volume posted in the June quarter.

The story for renewable energy loans was more impressive, with origination levels hitting a record high of $40 million in the September quarter, driven by PLT's new GreenConnect platform.

This amount marked a 39% increase in year-on-year terms as well as a 12% rise compared to the preceding quarter.

Personal loan originations softened, however, falling 2% year-on-year to $98 million, and 19% compared to the June quarter.

According to PLT, the disparity was due to efforts by the company to refine credit growth and focus more on delivering stable credit outcomes.

Credit quality improves

PLT reported improvements across key metrics relating to the quality of the company's loan book.

Its loan portfolio posted a weighted average Equifax credit score of 832 as of 30 September, for a rise compared to 830 at the end of the second quarter and 820 for the last financial year.

PLT's 90+ day credit arrears stood at 45 basis points as of the end of the third quarter, for a 49 basis point decline compared to the end of the preceding quarter.

Annualised net losses for the quarter fell below the 1 percentage point threshold to 82 basis points, as PLT sold off a number of loans that had been written off or entered default.

PLT CEO Daniel Foggo said the quarterly results attested to the company's efforts to improve credit quality.

'Evidencing stability in credit performance was a priority for this quarter, so it has been pleasing to deliver net annualised credit losses of below 1%, further demonstrating our capabilities in credit underwriting and loan portfolio management' Foggo said.

PLT has also cultivated a diverse range of funding sources, helping to maintain flexible access to funds amidst a hawkish monetary environment and rising interest rates.

'We have in place three funding warehouses, have attracted over 31 domestic and international investors to our ABS funding program and operate two investment platforms,' Foggo said.

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