Strong asset finance margins offset dip in mortgage margins amid shift to prime lending
ASX-listed non-bank lending heavyweight Pepper Money delivered a record 12 months of originations and assets under management (AUM) in its 2025 financial year ending 31 December.
Mortgage originations soared 66% year on year to $6.8 billion, with asset finance originations surging 20% to $3.5 billion.
Total AUM closed at $21.8 billion, comprising $10.2 billion in mortgages and $6.5 billion in asset finance. Servicing assets made up the remainder.
Net interest income dipped 1.7% to $335.6 million, although the group improved its profitability, with the net interest margin (NIM) increasing by eight basis points to 2.05%.
While mortgage NIMs reduced by 12 basis points, driven by a shift to prime lending, this was offset by a 31-basis-point increase in asset finance NIMs. "The significant increase in (asset finance) NIM was driven by the positive impact of pricing strategies on customer rates, coupled with improved funding margins, and swap rates," said Pepper Money.
Prime lending saw a 161% year-on-year increase to $4.6 billion, with near-prime falling 12% to $1.7 billion.
Pepper Money also saw a 56% increase in commercial property deals, although it remains a relatively small segment, with $400 million of originations in the year.
97% of mortgage originations came via the broker channel, split between 46% retail and 51% white label.
Pepper Money chief executive Mario Rehayem (pictured) said he was “extremely proud of our achievements” in 2025. “It has truly been a record-breaking year across all areas.”
