Harmoney’s Share Buy-Back and Debt Plans Highlight Capital Confidence Amid Market Risks
Harmoney Corp upgrades its FY25 cash NPAT guidance to $5.5 million, driven by strong loan book growth and improved margins, while announcing a strategic 5% on-market share buy-back.
- FY25 cash NPAT guidance raised from $5.0m to $5.5m
- Loan book grows 5% to $798m, with Australian segment up 16%
- Net interest margin improves to 9.1%, credit losses decline
- On-market share buy-back of up to 5% of issued capital announced
- Stellare 2.0 rollout in New Zealand on track for FY25 completion
Strong Loan Growth and Margin Expansion
Harmoney Corp Limited (ASX: HMY) has upgraded its FY25 cash NPAT guidance to $5.5 million, up from the previous $5.0 million forecast, reflecting robust operational momentum. The company’s loan book expanded 5% year-on-year to $798 million, underpinned by a 16% surge in the Australian loan book to $464 million, driven by the successful rollout of its proprietary Stellare® 2.0 digital lending platform.
Net interest margins (NIM) improved by 30 basis points to 9.1%, with new lending margins exceeding 10%, while credit losses declined to 3.8% from 4.1% in the prior comparative period. These factors contributed to a 60 basis point increase in risk-adjusted income to 5.3%, signaling enhanced profitability and credit quality.
Operational Efficiency and Cost Discipline
Harmoney’s cost-to-income ratio improved markedly to 18%, down from 21% a year earlier, reflecting the scalability of its automated lending platform and disciplined cost management. The company excludes non-cash share-based payments and depreciation from this ratio to align with cash NPAT reporting and peer comparisons, underscoring its operational efficiency.
New Zealand Market Transition and Future Growth
The rollout of Stellare 2.0 in New Zealand remains on track for completion within FY25, with all new customer lending now processed through the upgraded platform. While the New Zealand loan book contracted 6% to NZ$368 million due to subdued originations during the transition, the company anticipates that the completion of this upgrade will enable renewed growth and product innovation in FY26.
Capital Management and Share Buy-Back
In a significant capital management move, Harmoney announced an on-market share buy-back program of up to 5% of its issued capital, citing undervaluation and confidence in the company’s outlook. The company also plans to reduce corporate debt in FY26, although early repayment penalties restrict this until December 2025. Harmoney has cancelled $7.5 million of undrawn corporate debt and maintains over $25 million in available cash reserves, positioning it well for future loan book growth without equity dilution.
Looking Ahead
Harmoney’s management reaffirmed its FY26 cash NPAT target of over $10 million, buoyed by the anticipated benefits of the Stellare 2.0 platform rollout and ongoing operational leverage. The company’s strategic focus on automation, risk-based pricing, and scalable technology continues to differentiate it in the competitive consumer lending market across Australia and New Zealand.
Bottom Line?
Harmoney’s upgraded guidance and share buy-back signal growing confidence, but the market will watch closely as the New Zealand platform rollout completes and debt reduction plans unfold.
Questions in the middle?
- How will the completion of Stellare 2.0 in New Zealand impact loan origination growth and profitability in FY26?
- What are the potential effects of early corporate debt repayment penalties on Harmoney’s capital strategy?
- How sustainable are the recent improvements in net interest margin and credit losses amid evolving market conditions?
