Breakdowns

"The group has now realised a reduction in funding costs from 11.4% at 30 June 2020 to 4.8% for November 2020"
I take that to mean that the red shaded area will be removed from the cost structure from Nov onwards. The Loan Contribution will increase relatively.

So I presume Loan Impairment is the only bit which is less certain, which could potentially rise due to COVID, though they seemed to suggest that it's not really. I think the existing Loan Impairment expense would reflect a 9.6% provisioning rate. So the 6.6% reduction in funding costs should be enough to cover a pretty bit jump in impairments if necessary.

Then I think revenue will probably be rising eg. "Oct 2020 loan book +30% compared to Oct 2019. Though they did cut the interest rates recently. The 'starting at' rate dropped by 30% (8.99% to 6.25%), but I don't know about the average charged rate.

Anyway, if revenue rises, and costs per loan fall, then Loan contribution should rise quite a lot.

Is Loan Contribution used to cover fixed expenses such as admin? I see $0.008 EPS last year. So did they just surpass break even recently? You'd think cashflow should jump from this point, as they start to surpass the fixed costs.

We know funding costs are down. So most important should be Loan impairment rate and revenue? Then profit should follow.


If funding costs fell by almost 60%, you'd expect the EBITDA to more than triple. Plus whatever happens to revenue and impairments, mainly.