Harmoney’s Share Buy-Back Resumes Amid Rising Debt and Credit Quality Questions

Record FY25 Results Exceed Expectations

Harmoney Corp Limited (ASX, HMY) has reported a standout financial year ending June 2025, with Cash NPAT reaching $5.7 million; comfortably above its upgraded guidance of $5.5 million. This represents a remarkable 742% increase over the prior year, underscoring the company’s accelerating momentum in the consumer lending space across Australia and New Zealand.

The company’s Cash Return on Equity (RoE) also impressed, hitting 24% in the fourth quarter, well ahead of the 20% run-rate guidance. Statutory NPAT rose to $5.5 million, a significant $18.7 million improvement from FY24, which had been weighed down by a one-off write-down related to its legacy Stellare 1.0 platform.

Stellare 2.0 Platform Drives Growth and Efficiency

Central to Harmoney’s success is its proprietary Stellare 2.0 digital lending platform, which has revolutionised customer acquisition and loan origination. In Australia, a full year on Stellare 2.0 boosted new customer originations by 40%, while the platform’s rollout in New Zealand during the fourth quarter delivered an immediate 50%+ increase in new originations.

This technology upgrade has enabled the company to grow its loan book by 9% to $829 million, with the Australian segment expanding 19% year-on-year. The New Zealand loan book saw a slight contraction due to a cautious approach before full platform implementation but rebounded strongly post-rollout.

Improved Margins and Credit Quality

Harmoney’s net interest margin (NIM) improved to 9.3%, up from 8.8%, reflecting a shift towards higher-yielding loans and reduced funding costs. Credit losses contracted to 3.7%, moving closer to historic target levels, while 90+ day arrears remain low at 0.74%, even after a temporary uptick during the final platform migration phase.

The company’s risk-adjusted income rose to 5.7%, driven by both margin expansion and improved credit performance. Operational efficiency also improved, with the cost-to-income ratio falling to 19%, supported by automation and scalable technology.

Confident Outlook and Capital Management

Buoyed by these results, Harmoney has upgraded its FY26 Cash NPAT guidance by 20% to $12 million, representing a 111% increase over FY25. The company plans to resume its share buy-back program of up to 5% of issued capital, paused earlier this year, reflecting confidence in its valuation and cash flow generation.

Additionally, Harmoney intends to reduce corporate debt as permitted from December 2025, while maintaining strong cash reserves of $23 million and warehouse funding capacity exceeding $1 billion. This financial flexibility positions the company well to support continued loan book growth and product innovation, including a revamped secured car loan product leveraging Stellare 2.0’s capabilities.

Leadership Perspective

CEO David Stevens highlighted the transformative impact of Stellare 2.0 and the company’s strong operational leverage. He emphasised that the platform not only drives growth but also enables faster product innovation, setting the stage for further expansion in FY26 and beyond.

With a growing proportion of post-IPO investors now comprising 41% of the register, Harmoney’s market profile is strengthening alongside its financial performance.