As indicated in another thread, WAM analyst said recently : "the market is not really appreciating the earnings growth in that new lending side of things". The analyst may be right, but I find difficult at this stage to well understand what they are doing in this division.
Here is the last disclosure of the company about the loan portfolio : - specialty finance (focused on legal disbursement funding). Higher NIM, bespoke market, - residential lending. Lower NIM, highly scalable, - loan portfolio funding. Moderate NIM, highly scalable. Overall, their net interest margin (annualised) was 5.8 % during Jan-June 21.
This division seems to do very well with a strong increase of their loan portfolio (+ 160 % yoy), a good operating leverage (+ 23 % for expenses vs + 32 % for underlying revenues) and a high level of return on average invested capital (16.5 %). What I am missing is the level of risk in this business.
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