Solvar (ASX:SVR) used its first-half results call to highlight a return to loan book growth, progress ramping its new commercial-lending brand Bennji, and continued capital returns to shareholders as the company winds down its New Zealand operations and repatriates cash to Australia.
Bennji launch and commercial lending expansion
Management said it launched a new division, Bennji, focused on commercial lending and designed to complement the group’s existing commercial business that originates through AFS. The company said Bennji’s loan book has exceeded AUD 67 million and is “on track” to represent about 10% of the business by June 30, focusing on small business lending to support growth.
Looking ahead, management said it expects the Bennji loan book to double by the end of March as it moves from an initial testing phase to a ramp-up in broker distribution. During Q&A, the company said brokers will be the key distribution channel for the first 12 to 18 months, and noted that software and execution speed are central to the strategy. Management also said Bennji has written “around 300 loans” so far and is still identifying niches, citing transport and light construction equipment as areas of traction.
New Zealand rundown, dividends, and franking credits
Management reiterated that it has strategically decided to wind up its New Zealand business, repatriate funds to Australia, and use the proceeds to fund commercial expansion and special dividends. The company said New Zealand is now less than 10% of revenue and less than 10% of the portfolio, and it expects the contribution to become immaterial by FY 2027.
The company declared a total interim dividend of AUD 0.11, described as fully franked and made up of three components:
- AUD 0.025 special dividend paid in January (linked to the sale of a written-off loan book in New Zealand)
- AUD 0.06 normal interim dividend declared on the call
- AUD 0.025 additional special dividend, scheduled to be paid on April 7
Management said shareholder feedback—particularly at the AGM—has included interest in addressing the company’s growing franking credit balance. The board indicated it intends to prioritize special dividends as a way to limit the growth of franking credits as the New Zealand portfolio runs down.
Operating performance, loan book trends, and credit
Management reported that after a slow start to the first four months of the half—when the loan book “did go backwards”—the business saw a strong November and December, with positive momentum continuing into January. The company said it delivered 1.7% portfolio growth for the period, and emphasized that loan book growth is a key driver of revenue growth.
Management described the AFS business unit as having delivered its strongest first-half start since the group acquired the business. Executives attributed progress to leadership, personnel, and software changes, and said investors should start to see the benefits in FY 2027, with momentum building in the back half of the current year.
On credit, the company cited bad debts of 2.9%, which it said is below its target range of 3.5% to 4.5%. Management attributed the lower ratio mainly to the pull-forward sale of New Zealand assets and said investors should expect the bad debt level to rise somewhat in the second half while remaining within the target range. In Q&A, management said the reported bad debts included around AUD 8 million of one-off benefit from the New Zealand sale, noting that part of the transaction accelerated collections that would otherwise have come in over time.
The company also pointed to strong cash collections—citing a near 5% uplift in cash flow—and said cost-of-living pressures appear to be driving some customer deleveraging. Management said strong collections have been among the group’s best relative to loan book size, though it acknowledged that earlier pay-outs can reduce the duration of loans.
Earnings, funding, and capital management
Management said earnings were up 13.5% and reported normalized earnings per share of AUD 0.104. It also reported normalized net profit after tax of AUD 20 million, describing the result as supported by cost management and the New Zealand asset sale.
On funding, the company said it now operates with two warehouse funding facilities supporting the AFS/Bennji and Money3 businesses, after repaying all New Zealand debt using spare cash. Management said it renegotiated the Money3 warehouse in September/October, creating additional headroom and a “material” saving in senior funding costs, which it expects will flow through next year. The company said it is evaluating whether to pass through a recent 25 basis point rate increase or manage the balance between volume and margin.
Management said interest expense declined, primarily because New Zealand debt was repaid, and said it expects interest expense metrics to continue improving into next year, while acknowledging forecasts for further rate rises.
On capital returns, the company said it acquired 5.3 million shares in the half and now has roughly 189 million shares outstanding. However, management said the buyback is on hold while the share price remains where it is, and there is no intention to renew the program when it rolls off. The company said net tangible assets are now AUD 1.70, citing the impact of the buyback.
Regulatory update, guidance, and outlook themes
Management said it is nearing the end of its ASIC-related regulatory matter, noting that most alleged contraventions were set aside by the Federal Court in a judgment handed down in September. A penalty hearing remains, with management saying the court is expected to hear the matter on February 26, but the company did not provide an estimate of the penalty magnitude and said it would update the market once there is an indicative range.
For the year, management reiterated normalized net profit after tax guidance of AUD 36 million, saying it is “very confident” in achieving the number. It also said it expects to maintain a similar dividend payout ratio, assuming conditions remain stable. During Q&A, management said it expects Bennji’s loss for FY 2026 to be less than AUD 1 million, and described Bennji as a potential offset to the earnings gap left by New Zealand as the rundown completes.
On market conditions, management said it sees a resilient employment market supporting cash flows. In its Money3 segment, the company said it has not passed on the latest 25 basis point rate rise and that competitors have not widely repriced, adding that some peers are constrained by statutory pricing caps. It also noted that the group primarily funds used vehicles and therefore has limited exposure to EVs, while saying used vehicle prices have been declining, improving affordability and reducing average loan sizes, which it said can support volume.
Finally, management discussed its stake in Earlypay, describing it as roughly 20% and consistent with its strategy to broaden commercial market exposure. The company said it does not currently intend to increase its ownership, and that any dividends declared by Earlypay would flow through to Solvar’s accounts.
About Solvar (ASX:SVR)
Solvar Limited provides automotive and personal finance in Australia and New Zealand. The company offers vehicle loans that include loans for new and used cars, motorbikes, utility vehicles, trailers, tractors, trucks, caravan, boats, horse floats, ride on mowers, equipment, and jet skis, as well as secured and unsecured personal loans. It provides loans through brokers and dealers under the Money3, AFS, and Go Car Finance brand names. The company was formerly known as Money3 Corporation Limited and changed its name to Solvar Limited in November 2022.
