The MoneyMe Ltd (ASX: MME) share price has been caught up in the market selloff and is tumbling lower despite the release of positive first quarter update.
At the time of writing, the digital credit company's shares are down 3% to $1.31.
How did MoneyMe perform in the first quarter?
For the three months ended 30 September, MoneyMe recorded revenue of $12 million. This was an 18% increase on the prior corresponding period.
Loan originations came in at $45.3 million. This was 39% ahead of the fourth quarter and up 10.5% on the same period last year.
Management notes that new business origination momentum is building, with September originations up 30% compared to August.
At the end of the period, the company's gross loan book was $138.1 million, up 33% from $104.1 million at the end of the prior corresponding period.
Pleasingly, MoneyMe's strong origination and gross loan book growth continued to be achieved while maintaining tightened underwriting to reflect the COVID-19 environment. Furthermore, the credit profile of its customer base is continuing to improve, with an increase in the average Equifax score to 637 for the quarter. This compares to 622 a year earlier.
The company's loan provisioning to gross loan book remains stable at 9.6%. Management notes that this provisioning continues to reflect additional overlays for macroeconomic uncertainties. Furthermore, the loan book continues to perform well, with strong underlying diversification and positive repayment profiles from customers.
Outlook.
Looking ahead, management expects its loan book to grow significantly during the financial year. This will be supported by more competitive pricing, wider product offers, and an improving trading environment.
MoneyMe's Managing Director and Chief Executive Officer, Clayton Howes, commented: "I am delighted with MoneyMe's robust profitable growth for the trading quarter ended 30 September 2020 that continues to reflect the calibration of our lending to the COVID-19 environment."
"The 30% increase in originations in September compared to August are a clear reflection of momentum building in new business originations. It is exciting to see the new funding warehouse facility delivering significantly lower funding costs and new business origination capacity and our core and more recently launched products resonating so well with Generation Now."
"The innovation pipeline is continuing at pace as we continue to invest for massive scale and product diversification opportunities in Australia and overseas. A fantastic first quarter that sets the business up well for further high and profitable balance sheet growth," he concluded.
