FSA Group’s Loan Pools Hit $912M as Profit Before Tax Jumps 29%

Strong Growth in Lending Segments

FSA Group Ltd has showcased significant momentum in its lending business at the 2025 Annual General Meeting, with total loan origination reaching $396 million and loan pools expanding to $912 million by fiscal year-end. This growth is primarily fueled by car loans and asset finance, which saw origination increases of 32% and 12% respectively, underscoring the company’s successful pivot towards diversified consumer finance products.

Home loans and unsecured personal loans, while contributing less to growth, remain integral parts of the portfolio. The company’s strategic emphasis on broker channels is proving effective, with plans to push new originations beyond $600 million annually, supported by enhanced automation and an expanding offshore workforce.

Profitability and Margin Improvements Amid Challenges

FSA Group reported a 29% increase in profit before tax to $16.2 million in FY2025, reflecting disciplined pricing and improving net finance margins despite a challenging macroeconomic environment marked by rising interest rates. The net margin, representing the proportion of net finance income to total finance income, improved to 49% from previous years, aided by higher risk-adjusted fixed rates on new loans.

However, the company is not immune to pressures. Arrears have increased across home loans, car loans, and asset finance segments, influenced by cost-of-living and interest rate pressures. Impairment expenses more than doubled to $12.2 million, driven by loan origination growth and tougher conditions for asset finance loans originated under difficult economic circumstances.

Funding and Strategic Outlook

FSA Group’s funding strategy remains diversified, leveraging non-recourse warehouse facilities from Westpac and other Australian banks, complemented by periodic debt capital market issuances, including recent asset-backed securities totaling $550 million. This diversified funding base supports the company’s growth ambitions and risk management framework.

Looking ahead to 2026, FSA Group projects continued growth in loan origination and loan pools, with profit before tax guidance raised to a range of $23.5 million to $25.9 million. The company anticipates benefiting from operating leverage as loan pools reach critical mass, with a longer-term target of a $1.3 billion loan pool, $36 million to $40 million in annual profit before tax, and a return on equity exceeding 25%.

Automation and offshore expansion remain central to the growth strategy, aiming to contain costs and enhance credit quality through improved arrears management. While the outlook is positive, the company acknowledges risks related to broker uptake, funding availability, impairment levels, and macroeconomic factors.