It would appear that November was a good month for car lending with the loan pool increasing from $25.7M to $27.7M. I am working on the idea that there was approximately $2.2M in new car loans written for the month. You need to factor in that existing clients are paying down their loans and also being charged 16% interest.
Tim has stated that they are writing between $1.5M to $2M in new business per month, so in all likelihood November 2016 with $2.2M was probably a record month for car lending.
You might recall in a previous post that I explained that once the loan pool got to $50M, they expect to skim off 10% of the loan pool as profit each year. Applying that logic, in coming years, that $2.2M increase should generate an additional $220,000 in profit each year. There was mention at the AGM that the brakes were being applied somewhat to ensure they didn’t grow the loan pool too fast. Perhaps the brakes are being slowly released. Time will tell! It will be interesting to see what happened in December? We will find out in February 2017.
Westpac only increased the lending facility to $30M when they requested $50M. Just as well the board made the decision to hold onto the $10M from the sale of their business lending arm. The extra cash will allow them to continue lending in the short term. Hopefully Westpac gets on board soon! There may be valid reasons why Westpac are being extra cautious so we better keep an open mind!
Happy new year!
FSA Price at posting:
$1.30 Sentiment: Buy Disclosure: Held
