For personal use only

Transcription

1 Annual General Meeting 2015 ASX: DM1 Wednesday 18 November am November

2 Global Marketplace Lending Growth $23bn of volume via 8 of the leading US & UK Marketplace Lending (MPL) platforms in 2015e* : 100x growth in 5 years USD $m 25,000 CAGR:151% P2P volumes have grown at 151% CAGR since ,000 15,000 10,000 5, e Lending Club SOFI Prosper Avant Ondeck Zopa Funding Circle RateSetter Source: Liberum Capital & AltFi Data, MPL Company websites November

3 For personal use only Global MPL Industry $ Marketplace Lending is a global phenomenon largest markets: China, US, and UK = 2015e annual gross volume $4.4bn $22.7bn $1.5bn $157.0bn Source: AltFi Data, Company websites November

4 Marketplace Lending Growth Drivers 3 key drivers underpinning sector long term sustainability Online credit data as good/ better than bank data Ongoing unbundling of credit info ecosystem Online social data sources Enhanced credit data via Fin-Tech innovation Traditional Lender Operating expense: 5-7% Marketplace Lenders Operating expense: 2-3% 60% relative cost efficiency for smaller loan amounts Online Direct lenders (ODLs) are 60% more efficient than traditional lenders Reserve Requirements Branch Infrastructure Customer Acquisition Underwriting Origination Servicing Technology and business model drive costs down Customer Acquisition Underwriting Origination Servicing Average net promoter score (NPS) 1Q2015 Improved User Experience MPLs are using technology to drive convenience and better user experience=> 78% 64% 43% 21% 9% better Net Promoter Scores Lending Club Credit Unions Community Banks Regional Banks Credit cards November

5 Australian Banking Market Big 4 Australian banks are currently an oligopoly vulnerable to disruption Australian banks currently enjoy an oligopoly with an average RoE of 15.4% in 2012/13 (international peers well below 10%) charging above average rates and fees unsecured consumer lending is 3% assets and 16% of profits however personal lending volumes are falling under tighter prudential rules 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Average RoE between average average CommonWealth Wespac ANZ NAB JP Morgan RBS core BoA Lloyds Bank Source: Liberum, Bloomberg Average PBT as % of RWA between % 3% average 2% 1% average 0% CommonWealth Wespac ANZ NAB JP Morgan RBS core BoA Lloyds Bank Source: Liberum Source: RBA / AFR November

6 Consumer Loan Asset Class Performance In Australia since 2007: the average net yield on Consumer loans is 10.9% with a trough annual return of 8.0% Consumer finance returns are less volatile than SME Consumer Finance Loans attractive asset class throughthe-cycle in US, Australia (and elsewhere) US Credit Card Historic Net Yields- Annual % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Net Yield Charge off Average Net Yield Source: Liberum, Bloomberg, Federal Reserve Australia Consumer Loans: Historic Net Yield Annual % Net Yield Charge off Average net yield November 2015 Source: RBA, Australia bank company data, Liberum estimates 9

7 Direct Lending: Finding value/ minimising risk Retail capital channels into Direct Lending are evolving Currently topical Preliminary Classic P2P Diversified Closed-End Investment Trust Dedicated trusts for larger platforms 1-stop-shop P2P portal/ Offering convenient structured products Description P2P platform directly connecting with lenders Listed Investment trust lending via multiple platforms Dedicated listed Investment trust lending passively via one platform Single account / product for retail investors Example e.g. Zopa e.g. P2PGI / Ranger Direct Lending e.g. LendInvest/ Funding Circle / Direct Money Under development Inception Date e Under development Pros / cons for Investors Pros: Low cost Cons: Time intensive Pros: Diversified access Cons: Higher costs Pros: Efficient access; accessible via brokerage account Cons: Less diversification Pros: Convenience; diversified low cost, structured solutions Cons: Unavailable via security broker Pros / cons for Platforms Pros: Relatively low churn of lending capital Cons: Only likely to attract early adopters/ sophisticated investors Pros: Increased access to funding especially for early stage platforms Cons: Funding can be easily diverted to other platforms offering better returns Pros: Scalable permanent capital Cons: More difficult to attract capital initially for less established platforms due to relative illiquidity Pros: Access to broader retail mass market; equity ownership of portal Cons: More fluid funding than dedicated trust contingent on performance 7

8 DirectMoney Loan Growth Book $8.00M DirectMoney Loan Book [488] [399] Volume $1,400.0K $7.00M $6.00M $5.00M [391] [314] $5.05M [407] [327] $5.30M [439] [354] $5.94M $6.95M $1,152.3K [49] $1,200.0K $1,000.0K $800.0K $4.00M $782.5K [32] $600.0K $3.00M $2.00M $1.00M $260.9K [12] $359.8K [16] $400.0K $200.0K $0.00M Jul Aug Sep Oct $0.0K Loan Book at month end Loan Volume at month end [ ] Number of loans on book [ ] Number of loans wrigen for month [ ] Cumula?ve number of loans wrigen to date November