HOMECHOICE International’s fintech operations grew strongly in the six months to June 30 after the pandemic accelerated digital use among customers and it now plans to broaden its financial services offerings.
The group, which lifted diluted headline earnings per share 18.7 percent to 122.6 cents in the period and resumed dividends with a 47c per share payout, currently derives one in every two transactions from digital platforms, FinChoice chief executive Sean Wibberley said in a telephone interview.
HomeChoice, which sells products and financial services to more than 800 000 customers through omnichannel retail distribution channels, saw its share price rise sharply by 5.26 percent to R25 by midday.
The FinTech business “carefully” grew loan disbursements by 99 percent to R1.6 billion and gained market share, from a very small share of the unsecured lending market. Credit extended on digital channels now made up 57.7 percent of all credit. Wibberley said he expected the Fintech business’ current growth trajectory to continue into the second half.
Some 80 percent of loan disbursements were made to existing customers with proven credit performance. In 2020, loan disbursements were cut back to preserve cash and curb credit risk during the Covid-induced lockdowns.
FinChoice increased its active customer base by 11 percent to 242 000 in the six months and grew its loan book by 35 percent to R2.2bn, its insurance premiums by 40 percent and credit backed FinChoice MobiMoney wallet active accounts by 62 percent.
FinChoice’s trading profit rose by 88 percent to R139m, notwithstanding lower interest rates and higher Covid-related death claims.
Wibberley said significant cash was invested in fintech growth during the period, but HomeChoice remained conservatively geared with net debt to equity at 19 percent and cash resources of R236m and undrawn facilities of R335m.
The Fintech business provides personal loans, a digital-only credit backed wallet, insurance and digital payments that was attracting an active and loyal mobi-first customer base, the group said. The plan was to expand the insurance portfolio and to add additional utility in the form of QR code payments, merchant point-of-sale integration, and the ability to do money transfers to capitalise on its technology and ability to attract customers.
Executive chair Shirley Maltz said the interim results reflected continued digital growth in the FinTech and Retail divisions, taking advantage of the structural shift to digital mobile-first transacting, accelerated by the Covid restrictions.
She said their investments in technology in recent years, with cloud-based platforms, digital marketing and social media monetisation, as well as machine learning algorithms and data-driven customer acquisition to drive digitalisation, had enhanced the customer experience.
“We have some R570 million available in cash and borrowings and will continue to invest in growth opportunities when they arise,” said Maltz.
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