Humm Valuation - What is Sensible, page-66

Ah yes the MNY rebranded.

SVR decent CNPAT for FY23, but the outlook is poor - FY24 CNPAT is forecasted to drop by almost half

To blame the loan book repricing on FY24 is actually sleight of hand IMO - bond rates have been up for a while (granted slight spike recently) and FY23 results seem fine.

So why is FY23 fine but FY24 down?

IMO it's the industry SVR operate in - the auto industry is very cyclical and consumer spending in this area drops as rates rises (bond rates shot up but cash rate increases trailed).

But they can't say that openly. They do hint at it though - "temporarily slowing loan book growth" (nudge nudge).

So it's not a funding issue (int exp), it's a revenue issue (int inc) - some repricing, operational efficiencies and credit quality improvements can alleviate the P&L impact but you can't fight the industry.

Also, Credit losses seem manageable for now but that can always change (being sued by ASIC for irresponsible lending is a worry when mgt claiming focusing on credit quality).

And I do wonder about the motivations around the BB for SVR too.

I understand why the market is waiting to see HUM results - commercial repricing sounds like filtering through positively plus maybe cost normalisation benefits.

But market wants confirmation on the consumer side which is fair enough - I think it helps that there is broader consumer product appeal rather than industry concentration.

We should find out next week, then decision time...