How Will Bennji Drive Solvar’s Next Phase of Growth?

• 5.3% growth in Australian loan book to $832.7 million
• Launch of Bennji commercial finance platform targeting $22 billion market
• 40% increase in full-year dividend to 14.0 cents per share
• Completion of inaugural asset-backed securitisation unlocking funding capacity
• Stable bad debt levels and improved credit quality amid cost of living pressures

Strong Growth Anchored in Australian Market

Solvar Limited’s FY25 financial results reveal a company firmly on a growth trajectory, driven primarily by its Australian operations. The gross loan book expanded by 5.3% year-on-year to $832.7 million, supported by a 1.4% increase in interest income to $180.3 million. This growth reflects Solvar’s ability to navigate a challenging economic environment while maintaining disciplined credit standards.

Despite a slight uptick in bad debts to 4.1% from 3.9% in FY24, the company’s credit quality remains robust, with 79% of the Australian portfolio rated as ‘Strong and Good’. Cash collections also improved by 5.2%, underscoring effective risk management and operational resilience.

Bennji – A Strategic Leap into Commercial Finance

May 2025 marked a pivotal moment with the launch of Bennji, Solvar’s dedicated commercial finance platform. Positioned to capture a slice of Australia’s $22 billion commercial asset finance market, Bennji targets small to medium businesses seeking financing for assets like utes, vans, and light commercial equipment. With an average loan size of approximately $60,000, Bennji leverages Solvar’s existing distribution network and technology to streamline lending processes and improve customer experience.

Management views Bennji as a growth engine for FY26 and beyond, transitioning from its build phase into expansion. This initiative broadens Solvar’s addressable market and diversifies its revenue streams, complementing its established consumer and automotive finance businesses.

Capital Management and Funding Milestones

Solvar’s capital strategy also featured prominently in FY25. The company completed a share buyback of 14.3 million shares, representing 6.8% of the register, delivering immediate value to shareholders. Additionally, Solvar successfully executed its inaugural asset-backed securitisation (ABS) of the Money3 portfolio, unlocking new funding capacity and enhancing financial flexibility.

With over $300 million in headroom across debt facilities and the introduction of mezzanine funding, Solvar is well-positioned to support organic loan book growth and potential acquisitions. The company’s operating expense ratio improved to 29.9%, reflecting ongoing cost management and technology optimization efforts.

Dividend Growth and Outlook

Reflecting confidence in earnings momentum, Solvar declared a fully franked final dividend of 8.0 cents, bringing the total dividend for FY25 to 14.0 cents per share; a 40% increase on the prior year. Normalised net profit after tax (NPAT) rose 6.2% to $32.0 million for Australian operations and 17.4% to $34.1 million group-wide, with earnings per share up 21.2%.

Looking ahead, Solvar expects loan book growth to be driven by Bennji’s commercial loans, maintaining disciplined credit quality with bad debts forecast between 3.5% and 4.5%. The company anticipates a stable dividend payout ratio in FY26 amid a rate-cutting cycle that could boost consumer sentiment. However, regulatory scrutiny remains a watchpoint, with ongoing proceedings involving ASIC and the New Zealand Commerce Commission.

Bottom Line?

Solvar’s FY25 results set a solid foundation for growth, but regulatory outcomes and Bennji’s market traction will be key to watch.

Questions in the middle?

• How quickly will Bennji scale and contribute to overall earnings?
• What impact will ongoing regulatory proceedings have on Solvar’s operations?
• Can Solvar sustain its improved credit quality amid economic pressures?