Also in a simplified example, if Afterpay has $30m higher bad...

Also in a simplified example, if Afterpay has $30m higher bad debt from the $1.1bn but makes an extra $100m due to the nature of their business model then Afterpay's use of $1.1bn is simply better regardless of the fact that they have higher bad debt. You can almost think of Afterpay lending to 10 different people, profiting from 10 different people while Z1P lends to 2 people and profiting from 2 people. Of course bad debt is expected to be higher for Afterpay, but so are profits.

Bad debt / TTV cuts through all that distortion... simple