Over the last year, HomeChoice International (HiL) has been highly cash-generative, with R8.5-billion of cash collected off a R6-billion gross book. The group successfully increased its funding facilities to R3-billion. Group profit before tax was up by 11% to R394-million, but was impacted by 79% higher interest costs related to increased borrowings for fintech growth.

Over the same period, the group disbursed R4.8-billion in loans, delivered buy now, pay later (BNPL) gross merchant value of R1.5-billion (up by 104%), wrote R148-million in standalone insurance premiums (up by 27%) and demonstrated its cash collection capability by collecting R8.5-billion from customers (up by 18%). 

Credit policy changes pay off

Management attributed the impressive cash collections in the current difficult economic environment to effective credit policy changes. These included reducing average loans to new customers, with a strategic focus on proven existing customers, and effective management of credit limits based on individual customer profiles, with strategic increases to good-paying repeat customers. 

The acquisition of better-quality customers, together with stricter credit limits and mandatory debit order processes, successfully reduced retail debtor costs by 30%.

Over the last year, PayJustNow accepted an average of 69% of applications, compared to 75% the year before. Revisions to underwriting criteria improved acceptance rates to 72% in the fourth quarter of last year.

Fee income accounts for 34% of Weaver Fintech’s total revenue. Key drivers of fee income are BNPL fees and insurance, which includes credit life and standalone products.

PayJustNow, the company’s BNPL arm, doubled its all-digital customer base to 1.3 million in the past year. The company generated R1.5-billion in customer trade at merchants’ points of sale, with 75% of this coming from repeat customers who use the BNPL solution an average of 1.7 times every three months.

Craig Newborn, the chief executive of PayJustNow, says the company’s customer base is showing aggressive growth, with between 50,000 and 100,000 new customers onboarding each month. 

“We have two cohorts of customers using BNPL to manage their spend. First, you have those who recognise that it’s not feasible or practical to outlay a huge sum of money in one month, and these consumers may also be credit-adverse. 

“The second cohort is a growing population with a deeper understanding of credit, who would rather use a BNPL zero-interest, no-fee payment system rather than spending money on their credit card and incurring high interest charges,” he says. DM