Harmoney posts record $13.5m FY26 profit, sets $16m+ FY27 target

Profit Milestone and Operating Leverage

Harmoney Corp Limited (ASX:HMY) has delivered a standout financial year, with cash net profit after tax (Cash NPAT) soaring 139% to $13.5 million in FY26, comfortably exceeding its upgraded guidance of $13 million. Statutory net profit after tax also climbed 86% to $10.2 million, marking the highest profits in the company’s history. This surge reflects the successful scaling of its proprietary Stellare® 2.0 lending platform, which underpinned a 21% increase in loan originations while keeping operating costs tightly controlled.

The company’s CEO David Stevens highlighted the operational efficiency gains, noting that the platform’s automation allowed loan book and revenue growth without a corresponding rise in expenses. Cash operating costs rose just 3% despite a 7% expansion in the loan book to $889 million, driving the cost to income ratio down by 110 basis points to 17.8%. This improved leverage helped double the cash return on equity to 33%.

Loan Growth Powered by Repeat Customers

Loan originations reached $482.5 million, with a remarkable 41% growth in existing customer originations to $216.3 million. These returning borrowers carry nearly zero acquisition cost, contrasting with roughly 5.6% acquisition cost for new customers, and now represent 45% of total originations. New customer originations grew a more modest 8%, buoyed by a full year of Stellare® 2.0 deployment in New Zealand.

Geographically, the Australian loan book expanded 14% to $556 million, now comprising 62% of the group portfolio, while the New Zealand book rose 11% in local currency to NZ$406 million. The loan book’s growth was somewhat tempered in Australian dollar terms by a weaker New Zealand dollar at year-end, though this currency movement had minimal impact on overall profitability due to natural hedging of costs and income.

Margin Expansion and Credit Quality

Harmoney’s net interest margin (NIM) widened by 90 basis points to 10.2%, driven by a 100 basis point reduction in average funding costs to 6.8%, largely due to lower warehouse facility margins and a December 2025 refinancing of its corporate debt with a major Australian bank. This refinancing reduced the corporate debt facility size to $15 million and secured a materially lower margin, reinforcing confidence in the company’s credit quality and profitability.

Credit losses increased slightly to 3.9% of average gross loans but remained within the company’s 3%–4% target range. More encouragingly, 90+ day arrears improved to 0.67%, less than half the Australian personal loan market average of 1.61%. This strong credit performance contributed to a 70 basis point rise in risk-adjusted income margin to 6.4%.

New Channels and Product Expansion

FY26 saw the launch and growth of Harmoney’s secured car loan product, which now accounts for 13% of the loan book at $119 million, up 20% year-on-year. The company secured warehouse financing terms in New Zealand to support this expansion, targeting lower funding costs and further growth.

Additionally, Harmoney introduced a new intermediary lending channel in both New Zealand and Australia. The Australian channel, launched just weeks ago, has already written over $1 million in car loans, with a robust pipeline of intermediaries expected to onboard in FY27. This channel leverages the same Stellare® platform and credit models as the direct business, allowing rapid scale-up with minimal overhead.

Capital Position and Share Buy-Back

The company ended FY26 with $27 million in unrestricted cash and an additional $12 million in accessible cash, despite repaying $7.5 million of corporate debt principal during the year. Total warehouse credit capacity exceeds $1 billion, provided by three of Australia’s “Big-4” banks, supporting substantial future loan book growth.

Harmoney’s only recourse borrowing is the $15 million corporate debt facility, representing a low 31% of shareholders’ equity. The remainder of borrowings, $860 million, are non-recourse receivables funding secured solely against warehouse trust assets.

The Board has extended its on-market share buy-back program, which had acquired and cancelled over one million shares in FY26. Trading restrictions paused buy-backs at the end of the financial year, but the program can now recommence following these results.

Sustainability and Governance Advances

For the first time, Harmoney published a comprehensive sustainability report, disclosing FY26 performance against FY27 targets across governance, environment, employees, customers, and data security. The company maintained Net Zero Carbon certification for the fourth consecutive year, offsetting all residual emissions and focusing on cloud computing efficiency as its main emissions source.

The Board emphasized continued strong governance practices, compliance with Australian and New Zealand regulatory frameworks, and responsible lending policies. Harmoney is advancing the ethical use of AI in credit decisioning, piloting income verification tools within existing responsible lending controls to improve fairness and customer outcomes.

What to Watch in FY27

Harmoney’s FY27 Cash NPAT guidance stands at $16 million plus, reflecting confidence in ongoing loan book growth and operating leverage. The company plans to accelerate its customer flywheel by expanding multi-product lending, embedding AI underwriting enhancements, and growing embedded finance partnerships.

The intermediary channel rollout will be a key catalyst, with a growing partner pipeline in Australia and New Zealand expected to broaden customer reach. Meanwhile, the company’s focus on customer retention, AI-driven personalisation, and mobile app development aims to reduce acquisition costs and increase loan velocity.

Investors will be keen to see how Harmoney balances growth with credit quality and whether the new channels and products can sustain the momentum that drove record profits in FY26.