Pepper Money AUM at a Record $24b as Originations Grow 40% YoY

Pepper Money (ASX: PPM) has lifted total assets under management (AUM) to a record $24.0 billion at 30 June after originations reached a half-year high of $6.3b, up 40% from a year earlier.

Statutory NPAT rose 7% to $50.4 million, while pro-forma NPAT increased 15% to $53.9m, with net interest margin (NIM) improving 12 basis points to 2.10%.

Mortgage originations climbed 63% to a record $4.5b and Asset Finance originations rose 2% to $1.7b, taking lending AUM to $18.5b.

The board declared a fully franked interim dividend of 7.2 cents per share, up 12% on the 2025 interim payment, representing a 60% payout ratio and annualised yield of 9.5%.

Mortgage AUM Growth

Mortgage AUM increased 32% from June 2025 to $12.5b, with Prime accounting for 79% of mortgage originations compared with 70% a year earlier as the lender broadened volume across its distribution channels.

Total applications rose 35% to $9.9b, while mortgage NIM expanded 13bps to 1.64% and Asset Finance NIM increased 14bps to 2.87%, supported by improved funding costs.

Asset Finance AUM finished the half 4% lower at $6.0 billion after a $1.0 billion Whole Loan Sale in May, with another $0.4b mortgage WLS completed in March.

Pro-forma profit before tax and loan loss expense increased 17% to $127.8m as net interest income rose 17% to $184.5m and total operating income advanced 10% to $204.0m.

Revised Macro Assumptions

Loan loss expense increased 19% to $48.7m, reflecting portfolio growth and higher collective provisions after Pepper Money revised macro-economic assumptions and the weighting of base and downside scenarios.

Total loan loss provisions were $147.2m at 30 June and the coverage ratio remained 0.79%, unchanged from a year earlier, while mortgage arrears excluding WLS eased to 1.66% of AUM from 1.89% in June 2025.

Pro-forma expenses rose 7% to $124.9m including $3.5m of non-recurring transaction costs, with expenses excluding those costs up 4% to $121.4m and the adjusted cost-to-income ratio improving to 48.0% from 51.7%.

Warehouse capacity increased 13% from December to $15.1 billion to support originations, while Pepper Money completed a new three-year $275.0m Corporate Debt Facility in July with a $120.0m drawn balance, replacing the previous facility on better terms.

Servicing Adds Post-RAMS Scale

Servicing AUM rose 26% to $5.5b by June and then increased to $20.9b after the $15.4b RAMS portfolio transitioned on 1 August, taking total AUM to just under $40b.

The RAMS transition covered 44,778 accounts and brought 41 full-time equivalent employees (FTE) into Pepper Money, with servicing productivity rising 43% from $112.0m to $160.3m of AUM per FTE.

Pepper Money is set to service an Australian home loan and personal loan portfolio originated by HSBC Bank Australia with a book value of about $36b at 31 March, subject to completion of the proposed acquisition, which is expected in the first half of 2027.

Against a softer lending backdrop, total Australian mortgage enquiries for the three months to July were 20% below the comparable 2025 period while Pepper Money enquiries were 42% higher, supporting management’s focus on product expansion, distribution, and efficiency gains.