The government's relaxation of lending laws has the possibility of providing a boost to housing developers, banks and mortgage companies, as well as building materials companies. However, for investors who may have become disillusioned with the banking sector, non-bank lenders could be of particular interest. Non-bank lenders are often considered more nimble that traditional banks. They can also be regarded as adept at embracing technology and building and exploiting niche markets.
The following ASX shares represent possible alternatives for investors looking for exposure to the lending market from outside of the big four banks.
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Non-bank lenders for personal spending
Resimac Group Ltd (ASX: RMC) is a small cap non-bank lender with a loan book of $12.4 billion. Its FY20 statutory net profit after tax increased 19% on FY19, and the company's sales have grown by an average of 29.8% over a ten year period. The company has recently outlined its digital roadmap, designed to reduce friction and increase customer loyalty.
Wisr Ltd (ASX: WZR) is an online non-bank lender specialising in low-rate, unsecured loans. In FY20, the company saw an increase in revenue of 136% and an increase in loan originations by 95% when compared with FY19. The number of users in the Wisr system also increased by 389% on the prior year. Wisr is currently in the process of entering the $33 billion secured vehicle finance market.
Commercial lender ASX shares
With the economic challenges continuing to be faced due to the pandemic, many small to medium enterprises are trying to gauge the level of capital they need on hand.
CML Group Ltd (ASX: CGR) specialises in debtor finance, with its principal revenue generation coming from invoice finance. This company recently entered the fintech universe with the purchase of an online software-as-a-service (SaaS) platform. While already integrated with accounting platforms like Xero Limited (ASX: XRO), the company is planning on utilising the new platform to help it pursue clients at lower invoice levels, and improve customer lifecycle value.
Zip Co Ltd (ASX: Z1P) recently announced a deal with the Australian arm of eBay Inc (NASDAQ: EBAY) to provide what is essentially a form of trade finance. To illustrate further, it provides credit secured on products for sale to pay for marketing and other running costs. The company already provides up to a $25,000 revolving credit line with 0% interest if under 60 days. The non-bank lender is increasing its line of credit products in this area, providing it with revenue outside of the buy now, pay later (BNPL) markets.
