Why are shares in this small cap ASX fintech skyrocketing today?

Wisr Ltd (ASX: WZR) shares are up more than 20% this morning following an announcement by the online lender that it has hit $200 million in loan originations.

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Wisr Ltd (ASX: WZR) shares skyrocketed by more than 20% at one point this morning, following an announcement by the online lender that it has hit $200 million in loan originations.

Its initial $50 million in loan originations took 45 months to originate, the second $50 million took more than 8 months, the third $50 million 6 months, and the most recent $50 million less than 4 months. 

At the time of writing, the Wisr share price is up 7.41% to $0.14.

Loan originations increase 

Total loan originations at the end of the March quarter stood at $202.7 million. $38.9 million in new loans were originated during the quarter, a 23% increase quarter-on-quarter. Wisr reports that the average credit score on its book is 706, compared to the average Australian credit score of ~600. 

While Wisr emphasised the prime nature of its loan book and customer base, it flagged a deliberate moderation in loan originations in the fourth quarter, due to the company taking a conservative outlook on the coronavirus crisis. Wisr’s credit policy and decision engine rules have been tightened to reduce risk. 

Risk-based approach implemented 

A risk-based approach has been implemented to factor in high risk industry sectors and employment types including hospitality, tourism, airlines, arts, recreation, catering and retail. Wisr reports that its analysis confirms low balance sheet exposure to high risk categories that have been or are likely to be impacted by coronavirus. 

CEO Anthony Nantes said, “Wisr’s business model is focused on the best borrowers in Australia. Our credit policy has been enhanced to ensure we continue to support our targeted prime customer base through the COVID-19 disruption.”

Total portfolio arrears are stable with 90+ day arrears of 1.66% at 31 March, below internal risk appetite triggers. Wisr does expect a period of heightened consumer hardship stemming from coronavirus. The company, however, believes this impact is manageable in light of its small balance sheet loan exposure, strong cash balance, prime customer base and low exposure to high risk sectors.

Lending, growth, to continue 

Wisr brands itself as enhancing customer wellness through an ecosystem of products that allow for low cost customer acquisition. These include [email protected], a workplace financial wellness program, and the Wisr app, a debt reduction tool. The Wisr Ecosystem has continued to attract clients during the coronavirus pandemic, with growth above management expectations. 

Wisr says that it is in a strong financial position with cash of $35.6 million at 31 March and loans held on balance sheet available for sale. It reports that it is well placed to continue lending, operations, and growth throughout the coronavirus disruption and into recovery. 

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