Ann: FY23 Full Year Results Investor Presentation, page-8

Oracle
If I've interpreted this correctly, the 2H results were lower due to a combination of a lower average loan book (Jun23 1.247bn; Dec22 1.291bn), and also a management decision to increase their Credit loss provision (slides 19 & 23 on the presentation deck).

The loan book will have long term impacts as the interest revenues stabalise and even fall as loans come off (although it seems they are maintaining it at around this 1.2bn gross mark so with margins at ~12% they should generate ~150m in net revenues (after their interest cost which seems to be in the 6-7% mark*).

The ECL provision taken in 2H23 is ~6m so excluding this, performance in each half was roughly similar....what is unclear is whether this was actually necessary given what they are seeing or have they just put lipstick on a pig and flagged it as mgmt being conservative.....impossible to know and the auditors did not flag this apart from saying they reviewed their process.

As I said, if they maintain their gross loans at ~1.2bn and the margin at 12% with ECL of ~6-7% then they can generate ~10-15m in revenues but that is the ceiling if they cannot grow.....as soon as they start to grow, they face a situation as they did prior to 2023 in having to reserve upfront a portion of that loan and that becomes problematic (both from the messaging they are providing of profitable growth, and also in terms of getting loan/warehouse facilities which would not look favourably now at a statutory loss making business)

*12% NIM + their costs of 6-7%.....who is paying 18-19% interest on car or personal loans???? I mean 40% of their loans are secured. Yes I've lost money on this as an investor, but I can't imagine getting locked in as a customer at those rates