Pepper Money’s NPAT Rises 2% to $47m with 13.9% Dividend Yield
Pepper Money Limited reported a solid half-year performance with a 2% rise in net profit after tax and record assets under management of $20.1 billion. The company declared a 6.4 cent interim dividend, reflecting disciplined cost control and a positive outlook.
- Net profit after tax increased 2% to $47.0 million
- Record total assets under management reached $20.1 billion
- Interim dividend declared at 6.4 cents per share, combined yield 13.9%
- Net interest margin improved slightly to 1.98%
- Cost-to-income ratio improved to 51.7%, reflecting operational efficiencies
Strong Financial Performance Amid Market Recovery
Pepper Money Limited has delivered a steady half-year result for the six months ending 30 June 2025, with net profit after tax (NPAT) rising 2% to $47.0 million compared to the prior corresponding period. This modest growth comes alongside a record total assets under management (AUM) of $20.1 billion, underscoring the company’s expanding footprint in the Australian and New Zealand non-bank lending markets.
The company’s net interest margin (NIM) edged up to 1.98%, supported by a favourable portfolio mix and improved funding margins despite a slight dip in swap rates. This margin stability is critical in an environment of fluctuating interest rates and evolving market conditions.
Growth Driven by Mortgages and Asset Finance
Originations surged notably, with mortgage originations up 38% and asset finance originations rising 19% year-on-year. Mortgages remain the largest segment, although asset finance showed encouraging double-digit growth, reflecting Pepper Money’s diversified lending approach. The company’s disciplined cost management is evident in a reduced cost-to-income ratio of 51.7%, an improvement that highlights operational efficiencies and technology-driven process enhancements.
Loan loss provisions remained stable, with a coverage ratio of 0.79%, indicating prudent credit risk management despite some pressure in asset finance segments. The company’s focus on prime and near-prime lending segments continues to underpin credit quality.
Capital Management and Shareholder Returns
Pepper Money declared an interim dividend of 6.4 cents per share, contributing to a combined annualised yield of 13.9% when including a special dividend paid earlier in the year. The company also executed ongoing share buybacks, reflecting confidence in its capital position and commitment to returning value to shareholders. Corporate debt was actively managed, with $27.5 million retired in early 2025, supporting a strong liquidity position.
Looking Ahead – Technology and Market Opportunities
The outlook remains positive, buoyed by improving consumer confidence and stable funding markets. Pepper Money is leveraging artificial intelligence and technology to drive down costs and enhance customer experience, positioning itself well for scalable growth. The company’s expanding distribution footprint and strong product pipeline suggest it is well placed to capture further market share as demand for non-bank lending continues to recover.
Bottom Line?
Pepper Money’s disciplined growth and capital strategy set the stage for sustained shareholder returns amid a cautiously optimistic market environment.
Questions in the middle?
- How will Pepper Money navigate potential interest rate volatility in the second half of 2025?
- What impact will increased competition in asset finance have on margins and credit quality?
- How quickly can technology investments translate into further cost reductions and customer growth?
