1H22 Results Presentation

Mon, Feb 28 2022 09:45 am

[Please note that this is a text version of a release and so may be missing formatting, tables, images and other graphical elements that are not necessarily indicated here. We strongly suggest reading the PDF version to preserve full comprehension.]

Half Year FY22 Results

All values in $NZD unless stated otherwise




1HFY22 Financial Highlights & Upgraded FY22 Guidance
Why 100% consumer-direct (B2C) wins
Growth initiatives
All amounts in this presentation are denominated in $NZD unless otherwise stated


1HFY22 Financial Highlights
The 100% direct difference


Rapid growth across all key business metrics

1. Account acquisition
Powerful consumer-direct acquisition engine. Over 769k customer accounts have been added to our Stellare® platform.

2. New loan originations
High growth of new customer originations
powered by our Stellare® platform.

3. Superior net margins
Superior net interest margin and net lending margin demonstrate portfolio quality, benefit of 100% consumer direct and existing customer growth


New originations grow 224% on marketing scale up post IPO

New customer loan origination growth fuels receivables book growth
Significant growth in loan originations continues
58% of new customer loan originations now come from Australia (42% New Zealand)
New customer loan originations are a lead indicator of future originations/earnings as these customers ​later return for future needs
on average, every customer takes >2 loans
Australian loan book on track to exceed New Zealand loan book in ~12 months
Average loan size originated of ~$24,000


Loan book growth led by Australia expansion

Continued growth in 1HFY22, led by strong AU originations
Record period end $557m Group loan book, representing 22% growth on 2HFY21 (annualised)
Growth driven predominantly by 50% growth in Australian loan originations on 2HFY21, from targeted direct marketing and improved customer retention rates
New Zealand limited book growth due to COVID restrictions and significant NZ regulatory changes

February 2022
$600m Group Loan Book as at late February 2022


Harmoney upgrades FY22 market guidance

Harmoney forecasts its transition to warehouse funding to be ~90% complete by 30 June 2022 (83% at 31 January 2022).

FY21A, 1HFY22A and FY22F based on pro-forma financials.
FY22F assumes COVID-19 lockdown restrictions in Australia and New Zealand do not have a material impact on originations or repayments, and a 1.07 AUD/NZD exchange rate.


Harmoney exceeds its Nov 2020 IPO potential

Australian replication of consumer-direct (B2C) Stellare credit and marketing models
Significant Australian loan book growth
Transition of funding from peer-to-peer to warehouses/ABS
Leading economics
Continuous data led innovation

Revolutionary behaviour-based scorecards 1.7 and 1.8 in Australia and New Zealand driving higher conversion and lower losses
Enhanced product flexibility, introducing a 7 year loan term
Funnel enhancements, responding to major changes in New Zealand lending regulations


Why 100% consumer direct (B2C) wins


Largest 100% online consumer-direct (B2C) personal lender across Australia & New Zealand

The long term value of consumer-direct
Our unique strategy is to create direct relationships with consumers 100% online, at scale, then nurture them to create high value now and into the future. To do this Harmoney combines data, technology and digital marketing like no other.


The consumer-direct (B2C) multiplier effect
With a consumer-direct (B2C) relationship, Stellare® targets customers for remarketing campaigns; offering the right solution for the customer at the right time
The multiplier effect in action:
42K accounts from 2015 originally created $123m in year one loan originations.
Six years later, these same accounts contributed $464m, a 4x increase in loan originations
This multiplier effect is only just getting started for Harmoney in the Australian market


Why 100% consumer-direct (B2C) wins


More Aussies signed up for their personal loan via online than via phone, branch, broker combined

Google, Kantar Shopping Pulse, May 2021.


Market Size: Harmoney & listed peers <2% Australian personal lending market

Huge market opportunity
The Australian personal lending market represents an enormous growth opportunity as consumers move online.
The vast majority of personal lending is still provided by banks and traditional lenders.
Consumers are gravitating to purchasing and conducting financial services online.
Personal lending is for many purposes, e.g. home, car, life events, small business and consolidation of these.
Harmoney’s deep data focuses its marketing and funding on the most attractive opportunities.


Consumer-direct means deep consumer data

Broker: Limited data
Broker/intermediary models offer limited consumers and data to build smart credit and marketing platforms.

Direct: Deep data
Harmoney has much deeper consumer data. 7 years of consumer data from over 470,000+ loan applications totalling over $7.6 billion in loan applications.

Deep data + A.I.
Consumer data plus machine learning in the Stellare® platform builds smarter credit decisions and smarter digital advertising, which efficiently grows Harmoney’s loan originations.


Stellare’s automated loan application process facilitates rapid scalability

Fully automated loan applications are 66%

Straight-through-processing (STP) measures the ratio of loans that complete a fully automated loan application process (no human intervention).

Our STP settings can be temporarily adjusted to apply conservative settings as needed, such as when releasing a new scorecard, or where the macro conditions warrant a conservative approach.

Fully automated loan applications
6 month average Jul - Dec 21


Customer acquisition proven in NZ - now driving Australian growth

Proven acquisition model

The Stellare® marketing model outbids competitors for target consumers, real-time feedback refines targeting, driving down CAC.
The consumer-direct relationship then drives CAC lower as existing customers return for future needs, at ~$0 CAC i.e. ~$0 CAC to originate 2nd, 3rd, 4th… loan.
Proven in New Zealand and now replicating in Australia, as Stellare® learns and existing customer base grows.

Acquisition Cost to originations ratio in New Zealand


How does Stellare’s integration with Google work?


Efficient, accurate and optimised customer acquisition
Globally, Facebook has more than 1.93 billion daily users.


Deep data refines Libra scorecards

Extensive rich data fuels our proprietary technology


Libra: Harmoney’s behavioural data powered credit decisioning engine

Stellare® Libra 1.7: ~25% better credit performance

Early analysis of arrears for loans scored under Libra 1.7 (released February 2021) shows improved performance when compared to prior scorecards at the same point in time.​

We expect further performance improvements in future Libra releases as our innovative behavioural scorecard matures.​

Stellare® Libra 1.7/1.8: better-than-ever conversion

Bureau credit scores are too generic ​to be solely relied on for sophisticated ​pricing and personalised rates. Particularly ​for significant customer segments – ​like Millennials – who can have very thin ​credit files. Most importantly, our data ​tells us there are much better predictors ​of creditworthiness.​

Libra’s behaviour-based scorecard ​learns from data acquired through Harmoney’s 470,000+ completed loan applications. For version 1.7/1.8, Libra incorporates 100+ pD (probability of default) predictor data points identified through behavioural analysis.​

Libra 1.8 went live in NZ in mid-June ​2021. Early results show similar trend ​to Libra 1.7 in Australia.​


Continual Libra improvements lead to the best performance ever

Group arrears & losses performance

Group arrears and losses continue to perform ahead of expectation and are ​at historical lows. ​
Implemented Libra 1.7 in Australia in Feb 2021 and Libra 1.8 in New Zealand in June 2021, showing improved credit performance, through improvements ​in arrears and early defaults.​​


Libra’s accuracy rewarded with funding diversity, lower cost of funds and increased return on equity

~$300m undrawn funding capacity

Consistent low loss rates have attracted funding from 3 of the “Big 4” banks, bringing cost of funds down 370bps in last 18 months
A$105m securitisation completed in Oct 21, weighted average interest rate of 1.45% + hedged base rate
Return on equity has doubled since our inaugural securitisation as ~50% less capital now required in Harmoney warehouses
Transition to warehouse funding continues to lower funding costs, loan book now 83% warehouse funded
A$20m corporate debt facility executed in December 2021 to further support loan book growth


Scalability powered by automation

Automation powers operating cost efficiencies
100% online application with 66% of applications completed without human intervention
Credit officers remain six, while annual originations have grown 300%
Upgraded FY22 guidance - Forecast 30 June 22 loan book of >$650m

Pro-forma FY22 Guidance


$1billion average loan book expected to generate ~$45m Cash EBITDA


Growth initiatives


Harmoney’s growth initiatives - three areas of focus

1. Australian expansion

Australian ‘personal loan’ Google search market is 9x New Zealand.
Australian conversion expected to replicate NZ.
Expanding consumer direct marketing channels e.g. Meta partnership.
Brand awareness launch in late 2022.

2. AU/NZ conversion gains

7 year loan now live in AU/NZ
Major functionality releases in 2022 improving conversion.
Vertical focus - targeting our core verticals.
Co-borrower in AU in 2022.
Meta partnership - Stellare first party data integration to power advertising across Facebook / Instagram.

3. Enhanced & new products

Enhancing our existing product with the ‘Ultimate Personal Loan’
Deliver value beyond the personal loan into new products and segments ‘Product for Everyone’
Optimise product opportunities by using deep data, speed to market which is enabled by the Stellare® platform.


Australia direct $1b+ p.a. opportunity on replicating New Zealand’s growth and repeat business

New Zealand
Existing customers generate >50% of originations, as longer established, highly satisfied, direct customer base return for further needs

Existing customers generate ~20% of originations as customer base grows, future annuity stream to replicate NZ in 9 times larger market


2. Conversion improvements alone can rapidly grow our loan book

Quality of accounts attracted to Harmoney represents untapped potential to convert credit worthy customers through initiatives focused on engagement and nurturing (~81,000 alone in H1 FY22).

Our journey to offering lending to more customers.
With our current strong rate of account creation, continual improvements in our conversion rate through ongoing Libra scorecard development and new features to improve affordability and flexibility, we are in a position to accelerate origination growth.


3. Our data superiority drives new products: beyond personal loans to personal lending

Data advantage
We will use our data advantage to identify opportunities and build product experiences that fit customer goals and lifestyles. 

The ultimate personal loan

Redesign the personal loan to fit the customer’s objectives – move beyond personal loan to personal lending.
Increased flexibility: e.g. multi-drawdown, line of credit, goal–setting tranches.
Money in minutes.

Moving from one product to more enduring “always-on” limit product, increasing retention and customer lifetime value.
Flexibility increases market share beyond the traditional personal loan market.

A product for everyone

Delivering value beyond the personal loan into new segments (auto, SME), products, or financial tools.
Targeting new consumers and the untapped potential of existing accounts

Increase conversion & CLV through enhanced customer fit lowering CAC
Higher retention as the customer relationship moves beyond the personal loan.




AU$185m Australian portfolio. Building a high skill high value customer base.,


NZ$363m portfolio. Building a high skill high value customer base.


Profit and loss (pro forma and statutory reconciliation)




Balance sheet


Key operating and pro forma financial metrics


Important notice and disclaimer

No representation or warranty, express or implied, is made as to the fairness, completeness, accuracy, adequacy or reliability of information, opinions or conclusions in this presentation, including the financial information. To the maximum extent permitted by law, none of Harmoney or its related bodies corporate or their respective, its directors, officers, employees or contractors or agents do not accept liability or responsibility for any loss or damage resulting from the use or reliance on this presentation or its contents or otherwise arising in connection with it by any person, including, without limitation, any liability from fault or negligence.​

The financial information in this presentation has not been audited in accordance with Australian Auditing Standards.​

This presentation contains certain non-IFRS measures that Harmoney believes are relevant and appropriate to understanding its business. Investors should refer to the Half Year FY22 Results for further details.​

All values are expressed in New Zealand currency unless otherwise stated. All intellectual property rights in this presentation are owned by Harmoney.
The material in this presentation is provided for general information purposes only and is current as at the date of this presentation. It is not a prospectus or product disclosure statement, financial product or investment advice or a recommendation or offer to acquire Harmoney shares or other securities. It is not intended to be relied upon as advice to investors and does not take into account the investment objectives, financial situation or needs of any particular investor. Investors should assess their own financial circumstances and seek professional legal, tax, business and/or financial advice before making any investment decision. The information in this presentation does not purport to be complete. It should be read in conjunction with Harmoney’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange and New Zealand’s Exchange, which are available at www.asx.com.au and www.nzx.com respectively.​

This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations with respect to Harmoney Group’s business and operations, market conditions, results of operations and financial condition, specific provisions and risk management practices. Such forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of Harmoney Group and which may cause actual results, performance or achievements to differ materially from those expressed or implied by such statements. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date thereof. Past performance is not indicative of future performance.​

Announcement PDF

Markets News

NZ sharemarket down 1.13% for the week
Markets Market close

NZ sharemarket down 1.13% for the week

The S&P/NZX 50 Index closed at 11,796.21, down 39.83 points or 0.34%.

Graham Skellern 19 Apr 2024
Primary Sector

Bell Potter boosts Santana target price 53.5%

Aussie brokers increasingly like the look of a low-cost, high yield Otago gold play.

Pattrick Smellie 19 Apr 2024
Bell Potter boosts Santana target price 53.5%

Analysts upbeat about Tower's latest guidance

The insurer's shares have gained 36% so far this year. 

Rebecca Howard 19 Apr 2024
Analysts upbeat about Tower's latest guidance