Rising Costs and ASIC Inquiry Pose Risks Despite Humm Group’s Growth

Steady Growth in Challenging Conditions

Humm Group Limited has delivered a resilient performance in the quarter ending March 31, 2025, with assets under management rising 10% to $5.3 billion. This growth was driven by a 10% increase in both commercial assets and consumer receivables, underscoring the company’s ability to expand its lending footprint despite a slowing small and medium enterprise (SME) market.

Volumes from continuing products edged up 0.8% to $897.3 million, supported by a 3% rise in consumer finance volumes, while commercial volumes dipped 2.8%. The net interest margin remained stable at 5.5%, and net losses relative to average net receivables held steady at 1.8%, reflecting disciplined credit management.

Strategic Investments and Operational Modernization

Humm Group is actively modernizing its technology infrastructure, transitioning from traditional data centers to cloud-hosted services and implementing a modern data platform. This overhaul aims to enhance product reliability and resilience. Additionally, the company is preparing to re-platform its credit card systems, which will enable faster rollout of new customer and partner offerings.

In parallel, the company is accelerating the launch of a regulated hybrid loan product in Australia, aligning with new buy-now-pay-later (BNPL) regulations. This move positions hummgroup to capitalize on evolving consumer finance trends and regulatory frameworks.

Geographic and Segment Highlights

The Irish business continues to outperform, with a remarkable 23% volume growth, a 220 basis point expansion in net interest margin, and a return on equity in the high 20% range. This strong performance supports hummgroup’s UK growth ambitions, with the UK operation expected to break even by June 2025.

Meanwhile, the Canadian business is undergoing significant restructuring to reduce losses by $4 million annually. Changes include relocating support operations to Ireland, reducing full-time employees, and reviewing merchant pricing. The company will closely monitor Canadian operations over the next year to ensure alignment with return expectations.

Cost Management and Regulatory Challenges

Management has improved the cost-to-income ratio by 10% year-on-year to 53.5%, reflecting tighter cost controls and reduced marketing spend. However, the company faces ongoing expenses related to an Australian Securities and Investments Commission (ASIC) inquiry and increased operational and capital expenditures to meet regulatory deadlines for the new loan product.

Commercial lending losses have increased in certain sectors, notably transport in Victoria, but overall loss expectations remain stable. The company continues to expand its commercial product range and geographic reach, aiming to improve market share despite economic headwinds.

Looking Ahead

Humm Group’s board and management remain focused on executing their strategic priorities, including geographic expansion, product diversification, and technology modernization. While regulatory and operational challenges persist, the company’s underlying performance and cost discipline provide a solid foundation for future growth.