- Fintech stock MoneyMe (MME) has announced its debt funding costs have reduced to 4.8 per cent following a refinancing of its funding facilities
- The changes include adding the Australian Office of Financial Management (AOFM) $58 million mezzanine funding into the new Major Bank warehouse
- It also includes refinancing of the existing Velocity warehouse to bring MME’s total funding capacity to $227 million
- The company has also expanded its customer base to target higher loan transactions and customers with lower personal loan pricing
- Additionally, MoneyMe revealed it had recorded its best month for originations since January this year
- Shares in MME have closed trading for $1.45 each, down 2.36 per cent
MoneyMe (MME) has announced its debt funding costs have reduced significantly following a refinancing of its funding facilities.
The changes have allowed the fintech stock to successfully lower its funding costs down from 11.4 per cent in June to 4.8 per cent at the end of November.
The company also believes the lower debt funding costs will in turn allow MME to further drive balance sheet growth.
Refinancing & customers
The refinancing by MoneyMe includes adding the Australian Office of Financial Management’s (AOFM) $58 million mezzanine funding into its new major bank warehouse.
It also involved refinancing the existing Velocity warehouse to bring MME’s total funding capacity to $227 million, with that figure likely to grow alongside loan assets.
“Fully realising the step change reduction in its cost of funding is a truly fantastic and exciting landmark achievement for the MoneyMe Group,” MoneyMe’s Managing Director and CEO Clayton Howes said.
“We welcome the AOFM as a mezzanine debt investor and look forward to fully leveraging the lower cost of funds and capacity from the new Major Bank warehouse funding facility to further grow and diversify our balance sheet to meet
the needs of Generation Now,” he added.
Along with the changes to its funding facilities, MoneyMe has revealed it will expand its customer base.
Specifically, the company said it had “leveraged its risk-based pricing model to selectively lower personal loan product pricing to support growing the customer base, target higher-value customers and higher loan transaction values.”
The change follows MME’s decision to increase the maximum personal loan amount to $50,000 in September this year.
Originations
MoneyMe’s net interest margin is expected to be maintained following the pricing reductions, because of the related reductions in the cost of funding.
The company also believes the pricing change will result in increased originations from “higher credit quality consumers” which in turn will grow its portfolio’s average Equifax score.
MoneyMe’s originations have already grown by 8 per cent in October to total $19.3 million — the highest level of originations since January 2020.
At the end of October, the company said its gross loan book totalled $145.1 million — up 30 per cent year-on-year.
Following today’s update, MoneyMe shares have ended the trading session down a slight 2.36 per cent at $1.45 each.