Vanished, like an old oak table

Queenie: Vanished, Lord Percy, not *varnished*.

Lord Percy Percy: Forgive me, my lady, but my uncle Bertram’s old oak table completely vanished. ‘Twas on the night of the great Stepney fire. And on that same terrible night, his house and all his other things completely vanished too. So did he, in fact. It was a most perplexing mystery.

Aaaaaand, Brian is gone.

Overnight news coverage like this probably didn’t help:

Here’s a thought; if your best line of defence is that you’re not as bad as one of the largest frauds of our generation or not as bad as the largest banking collapses in the modern era, you might be in trouble.

Seriously though, Wokepac has more change and comms consultants than Belgium has waffle makers and he still made gaffes like this.

Who was advising him and why didn’t they said, “Brian, just fucking work from home until the Board meeting”?

Bill’s Opinion

Introducing William of Ockham’s General Theory of Australia:

A small pond results in a masssive case of the Dunning-Kruger effect.

This is fine in a rising or stable market.

The moment negative consequences occur however, the enormous gulf between actual competence and perception is exposed.

Just the PR disaster of this sorry episode should be proof enough.

For me, a critical indicator you are dealing with someone who is subject to The General Theory of Australia are the shoes they are wearing.

No, hear me out…..

If you have a good inkling the person is earning, let’s say more than $250k a year, yet they are wearing rubber-soled shoes, likely bought at Kmart, rather than handmade Loakes or perhaps Cheney’s, then there’s a fair chance they’ve rose to that position without ever having to be tested in adversity.

That metric doesn’t work so well for females; I tend to judge the women by their choice of Friday casual clothes.

9 Replies to “Vanished, like an old oak table”

  1. Westpac shares are now a screaming buy that he has “stood down” for folk that buy bank shares, now up 0.78% since opening.

  2. Rant approaching, but first, that was admirably quick as a post. My own prediction was that they would wait, given the lack of an obvious successor and the destabilising and demoralising effect of a capitulation. Not happy to be wrong but clearly feedback was heavily against a measured approach.

    Peter King is the perfect charisma free zone who had already retired to be leading during this transition period. He will continue the same low cost to income and high payout ratio regime that is a significant contributor to the fatigue within the business when trying to fix real problems with investment dollars. There is a real chance that the key issue/s was/were not requested to be fixed because the answer was known – no money. In which case culpability extends in depth and across the organisation, and makes this outcome correct. If only we could ensure retribution on those that take our core investment dollars so that we can tag loans as ‘green’.

    That a business can be both under self identified extreme regulatory and competitive pressure and maintain both market leading cost to income and payout ratios should create some powerful cognitive dissonance. Or not. Perhaps it is a case of no cognition, no dissonance.

    The good news is that there will be no groups of Westpac staff ‘whooping it up’ with alcohol at Christmas parties. Because that would be totally unaustralian.

    Instead there will be groups of individuals of varying commitment but otherwise shared workplaces, need to pay a mortgage, raise children etc gathered at end of year events to have a few self funded drinks. They are likely to look forward to a year when some prick with a North American consultants accent doesn’t ask them to put on a clown suit in the pursuit of world’s best practice.

    1. “That a business can be both under self identified extreme regulatory and competitive pressure and maintain both market leading cost to income and payout ratios should create some powerful cognitive dissonance. Or not. Perhaps it is a case of no cognition, no dissonance. “


      I know Bardon thinks it’s a “buy”, but there’s structural issues there that are becoming increasingly difficult to mask.

      1. “I know Bardon thinks it’s a “buy”, but there’s structural issues there that are becoming increasingly difficult to mask.”

        Its not me, its the brokers that have put a buy rating on it. I wouldn’t touch any Australian bank or any bank for that matter in a low rate environment, plus I am now a small cap investor in any sector. The theory is that Westpac is oversold, share prices quite often rise when unpopular leaders leave, NAB’s did after their dudes left after the banking commission. Plus they will have some insurance cover over the fines that are coming. The big fund managers and mum and dad investors have been brought up in an environment where owning banks shares was a pathway to wealth, which it was. They dont consider whether that has changed now and the safety of a bank and their dividend sells them in the end.

        So he walks with $2.5m and loses his short term and long term incentives. It looks like if you are requested to stand down you lose them and if you opt to stand down of your own volition then you get to keep them, judging by my voluntary stand down anyway!

    1. I’ve had some push back from non-commenting readers.

      To which I say, “dress for the job you want, not the one you’ve got”.

  3. Judging someone by the price tag on the clothes they wear — OMG. Someone around here never read Kipling.

    And oh by the way the job I want would never require me to dress like a ponce.

    1. I do like Kipling in small doses. He’s not a god though, as his son John might attest.

      Personal appearance is a useful heuristic to judge whether the individual has extensive and wide experience or has risen quickly in a narrow tower.

      It’s not infallible, just a handy shorthand.

  4. Meet the new kids on the block.

    I like the looks of Wisr our first neo-lender.


    The rise of online lenders

    Not so long ago, taking out a personal or business loan involved attending the branch of a bank or mutual society in person. As technology has advanced, much of the loan application process has become automated. This means that customers can apply for a loan and supply the relevant data without needing to attend in person.

    Customers can enter the relevant application details and upload required supporting documents online. Once received, large components of credit assessment can be conducted via artificial intelligence. This allows for a preliminary response to the application to be provided within minutes.

    Online lenders have utilised these advances in technology to carve out niches in the lending marketplace. They do not attempt to be banks, and avoid competing head to head with Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA). Instead, they seek market share in areas where they have a perceived competitive advantage.

    Money3 Corporation Limited (ASX: MNY)

    Money3 provides personal loans up to $12,000 and car loans up to $50,000. The company originates over $1 million in loans every business day; currently 1 in 500 registered vehicles in Australia have a loan with Money3. Shares are currently trading at $2.20, up 40% from $1.57 at the start of the year.

    Revenue grew 24.6% to $91.7 million in FY19. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 17.3% to $47.5 million and net profits after tax increased 14.2% to $24.2 million. Earnings per share were 13.48 cents and a dividend of 10 cents per share fully franked was paid.

    Money3 acquired Go Car Finance in New Zealand in 2H19, expanding the company’s geographic footprint. Currently 1 in 800 registered vehicles in New Zealand have a loan with Go Car Finance. New Zealand has the fourth highest rate of vehicle ownership globally.

    In 1Q20 Money3 delivered unaudited revenue of $30.5 million, up 48.8% on the prior corresponding period. EBITDA was up 41% to $14.8 million and net profit after tax (NPAT) was up 53.1% to $7.5 million.

    In FY20, NPAT growth is forecast to exceed 25% from continuing operations. Money3 also plans to expand its addressable market by geography and product. Credit decisioning is to be streamlined and the application process simplified to reduce loan turnaround times. Money3 forecasts it will originate 26,000 loans in Australia and 5,000 loans in New Zealand in FY20.

    Prospa Group Ltd (ASX: PGL)

    Prospa offers small business loans of $5,000 to $300,000 with terms between 3 and 24 months.

    Prospa IPO’d in June at an offer price of $3.78 and immediately lifted 19% to $4.50. Prospa shares reached highs of $4.96 in September, before dropping off a cliff in November. Shares in the company fell 27.4% in a day, from $3.86 to $2.80, on an update to prospectus forecasts.

    CY19 revenue is anticipated to be $143.8 million, $12.6 million or 8% below the prospectus forecast. CY19 originations are actually expected to be 2.7% higher than the prospectus forecast. The variation is due to increased use of Prospa’s service by higher credit grade customers. These customers pay lower rates over longer loan terms.

    In 1H20 Prospa is forecasting revenue of $75 million, down from the $88 million prospectus forecast. Increased use of products by premium customers mean revenue is recognised over a longer time horizon. EBITDA is predicted to be $4 million in 1H20, down from $11.3 million in the prospectus forecast.

    In the first four months of FY20, Prospa originated $181.2 million in loans, a 40% increase on the same period in 2018. Total originations for FY20 are expected to be in the range of $626 million to $640 million, an increase of 25% to 28% on FY19, with revenue of at least $150 million. Prospa is currently trading at $2.01.

    Wisr Ltd (ASX: WZR)

    Wisr offers personal loans of $5000 to $60,000 on 3, 5, and 7 year loan terms and advertises itself as Australia’s first neo-lender. Wisr’s average loan size is $25,000 with a loan term of 4 years. Shares in Wisr are currently trading at 16 cents per share, up from 4 cents at the start of the year.

    Wisr originated $3.6 million in loans in FY17, $18.1 million in FY18, and $68.9 million in FY19. Revenue is predominantly derived from loan establishment fees and management fees from servicing loans sold to third parties.

    Operating revenue increased 91% in FY19 to $3.04 million, up from $1.6 million in FY18. A net loss after tax of $7.7 million was reported in FY19, attributed to forward investing in the Wisr ecosystem to position the company for long-term growth.

    FY19 was focused on creating the neo-lender model and building a strong brand that resonates in the market. In FY20, the company is looking to diversify funding structures to increase margins, launch a secured vehicle finance product to expand its addressable market, and open B2B2C channels to reach additional customers.

    Wisr reports that there has never been a better time to be a fintech operating in the consumer lending market. Fintech online lending launched in 2014 in Australia and held 0.5% of the market share in 2017, doubling to 1% in 2018. In the US and UK, fintech online lending launched earlier, in 2006. By 2018 fintech online lending held 38% of market share in the US and 25% in the U.K. There is potentially scope for a similar take up rate in Australia.

    Local influences such as the Royal Commission, positive credit reporting, and Open Banking may facilitate the flow of customers to alternative lenders such as Wisr. These influences could also improve the ease with which alternative lenders are able to access relevant customer information and process loan applications.

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