Small business lender Prospa says its performance in April and May has been materially impacted by COVID-19 related pressures on its customers in Australia and New Zealand.
Prospa provided COVID-19 related relief packages to 5,501 customers between March and May.
This included full deferrals of six weeks duration or partial deferrals of 50 per cent of the repayment for 12 weeks. Interest on the outstanding principal during the full or partial deferral periods was capitalised with no fees being charged.
The sectors most adversely impacted by government restrictions included tourism related businesses, cafes, beauticians, gyms, pubs and restaurants and clothing retailers, the lender said.
Chemists, liquor retail, health providers and essential food providers remained resilient despite the lockdowns.
The lender has also temporarily adjusted its underwriting parameters and credit assessment model in response to the changed economic environment, resulting in reduced origination volumes in April and May.
The downswing comes after a solid performance in the March quarter.
Prospa said total loan originations had risen 21.5 per cent in the three-month period to $122.8 million, in line with management’s expectations.
Group revenue during the quarter was up 13 per cent from a year ago to $37.4 million, while the business delivered gross loans during the quarter of $465 million, up 41.7 per cent from a year ago.
The lender says it is now seeing early signs of recovery in both countries, with the volume of support requests returning to pre-COVID-19 levels.
As at June 4, 12.8 per cent and 19.9 per cent respectively of Prospa’s customers remained on a full deferral and a partial repayment arrangement.
Another 1,021 or 18.6 per cent have reverted to full contractual repayments, it said.
Prospa said it has cut operating expenses to adjust to the changed situation and these are expected to be about 32 per cent lower in the June quarter.
The company declined to provide a revenue guidance due to continued uncertainty around the potential economic impact on small businesses across Australia and New Zealand.