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The non-bank lender foresees an ongoing period of economic uncertainty in the small-business sector.
Non-bank lender Prospa Group Limited (Prospa) stated in its results for the financial year ended 30 June 2023 that it will continue to work on providing profitable and sustainable lending to small businesses as it anticipates a period of ongoing economic certainty impacting the sector across Australia and New Zealand.
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Prospa closed out the financial year with originations of $753.7 million, up 2.9 per cent on the previous financial year ($732.5 million), which reflected the non-bank lender’s deliberate tightening of credit in the second half due to an “observed weaking in the macro environment”.
The non-bank lender previously reported that loan originations fell in the quarter ended 30 June 2023, originating $155 million in small- to medium-sized enterprise (SME) loans in the three-month period, revealing a decrease of 37 per cent when compared to 4Q22.
Closing gross loans were $862.2 million in FY23, an increase of 22.9 per cent on the $701.3 million in the previous corresponding period.
Revenue for the non-bank lender increased to $285.6 million, an increase of 60.2 per cent on FY22, which was supported by an expanding portfolio yield increase of 34.8 per cent and “significant asset growth”.
Prospa co-founder and chief executive Greg Moshal said the non-bank lender continued to “provide balanced lending support to small businesses in the current economic environment”.
“FY23 originations were pleasing despite the tighter credit risk settings implemented in response to the rapid changes within the broader economy throughout the second half,” Mr Moshal said.
“Our portfolio yield expanded; however, losses were higher as certain small businesses experience heightened cost pressures, changes in consumer demands and weaking revenue. While seeing steady demand through all channels, we proactively manage our credit risk assessment policies.”
Furthermore, Prospa stated it looks to further execute its core system replatforming roadmap, which is set for completion during the next calendar year.
“Investment in our technology replatforming is in the final stages,” Mr Moshal added.
“It’s pleasing to see the Australian and New Zealand LOC originating from the new platform, with the NZ SBL currently in pilot.”
Debt facility established to counter harsh economic conditions
In order to mitigate economic headwinds, Prospa established a corporate debt facility of $12 million in mid-July this year.
According to the non-bank lender, the debt facility’s purpose is to ensure investment in the group’s product and strategic road map continues, while optimising cash reserves over the next 12 months.
It further stated the corporate debt facility would bolster its position with stable funding capacity across its various funding facilities as it looks to support small businesses across Australia and New Zealand.
[RELATED: Loan originations fall 37% at Prospa]
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