I reckon there is recent history to suggest that Prospa should...

I reckon there is recent history to suggest that Prospa should be fine. And that is all what happened last year with the extended lockdowns and uncertainty - which they weathered resiliently and have now reverted to significant monthly originations as a group, with record setting origination in NZ. The current lockdowns should hopefully be more temporary compared to last year.

If certain SME businesses need support, Prospa will provide them with the support they need through loan deferrals and other measures - similar to what they did last year. This allowed those businesses last year to continue on until such time as a recovery happens that enables them to resume payments as usual. Deferred interest would generally get added to the outstanding balance so Prospa doesn't lose out here. The customer will ultimate bear higher interest payments than otherwise, but at least this reduces their chance of default.

Also where loans are unsecured by Prospa, higher interest rates will be charged to reflect this to mitigate the losses to the lender in the event of a default, looking at this from an overall basis over the life of the loan.

NSW has already provided a support package so that should provide some relief to these SME borrowers.

Prospa should also benefit in the medium to long term as interest rates start to go back up as inflation rises. This will improve its margin considerable as it give it more flexibility to adjust interest rates charged accordingly.

Looks like there is a bit more activity and volume with the share price today. Might be the start of a long overdue re-rate.