Lockdowns weigh on Harmoney result but pick-up strong from second half

A tough first half impacted by Covid-19 lockdowns has weighed on Harmoney’s first full-year result as a listed company.

The online lender which dual listed on the NZX and ASX last year revealed a cash net profit down $400,000 for the year to June 30, compared to the $2.8 million in the black for its prior financial year.

Harmoney’s income fell 8 per cent to $79.1m as its average loan book was down due to the impacts of Covid-19.

But its net lending margin rose from 5.8 to 6.8 per cent due to lower credit losses and funding costs.

Harmoney managing director David 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 Covid-19 in the first half.

“This recovery is expected to drive a strong uplift in revenue and receivables growth in FY22. In addition, we are now well-positioned with close to 700,000 direct consumer accounts representing a 51 per cent cumulative annual growth rate over the past six years.”

Stevens said it had just begun to see the results of its investment in the business and benefits from its approach to consumer lending.

“With the ability to access rich insights through our data, we are able to offer our customers tailored solutions to meet their needs while reducing lending risk and delivering strong results for our shareholders.”

Harmoney’s loan book grew to $501m over the year with loan originations up 6 per cent. Since the end of its financial year, July loan originations had hit $54m – a new monthly record for the lender.

Stevens said Harmoney’s transition to warehouse funding remained on track with 61 per cent of the book warehouse-funded at June 30 and undrawn committed warehouse funding lines of NZ$205m.

Early last year the company stopped using peer-to-peer lending to fund the business.

Last week Harmoney announced a settlement agreement with the Commerce Commission.

It will repay $7m 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 next month but has now been settled out of court.

New chair

Harmoney also announced it will have a new chair effective immediately. Paul Lahiff has stepped into the role following a decision by David Flacks to step down.

Flacks will remain a director until a replacement is found.

Harmoney shares were trading at $2.07 on the NZX this morning, well down on the $3.57 they traded at when first listing in November 2020.

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