It speaks to the success, over the long term, of our customer and product diversification and risk-based pricing discipline. On diversification, we have been able focus on growing auto, SME, SMSF [self-managed superannuation fund] and personal loan asset classes at a time of significant challenge faced in residential lending. As our nonresidential loans are higher yielding, we have achieved the double benefit of asset growth and NIM [net interest margin] expansion.

Equally important is our approach to customer risk assessment and pricing. Liberty is renowned for its granular risk-based pricing and differentiated risk-based loan terms offered to borrowers. This approach is particularly powerful in times of uncertainty as our approach to risk can be rapidly altered to manage risks as they emerge. This helps ensure sound decisions are being taken at the borrower level and maintain a well-balanced loan portfolio.

Investors often ask us about our unique equity capital and leverage position. Our investment-grade credit rating, which is a significant point of differentiation in the nonbank sector, also gives us access to tremendous funding flexibility via the senior-unsecured bond market.

As well as the tangible benefits of the funding flexibility this level of capitalisation offers, there are other intangible benefits. The fact we hold equity capital in excess of 15 per cent of risk-weighted assets – which is above the major banks’ tier-one equity – demonstrates to investors that we are a very strong counterparty when we come to the capital market.

Yes. There are two aspects to capital. One is that, as the credit rating process is based on volume of risk-weighted assets, we need to generate capital – to the extent our portfolio is growing – to retain our rating. We are very focused on this, via our capital management policy, and it was a core principle of Liberty’s founders from day one. If more of our equity capital had been distributed as dividends over the years, it would be very hard to catch up now.

The second aspect is that because we have harvested earnings, and therefore cash, we don’t to any material extent use warehouse mezzanine funding. For instance, when the AOFM [Australian Office of Financial Management] came in to replace exiting investors in the mezzanine space in 2020 – for a total of about A$2-3 billion (US$1.3-1.9 billion) – Liberty was not one of the roughly 30 nonbank names that took this support. Because we have equity, we do not need this type of leverage to be able to support customers.

Higher leverage may be achievable when capital markets are available and money is cheap. But when the environment is more challenging, so too is maintaining high leverage – which thereby increases business risk. By using our own capital to support our senior lenders, we are far more in control of when and from where we borrow and at what cost.

Everything comes back to capital. We have always approached the business by saying we are risk managers first, and, second, providers of solutions to customers. Regarding funding, the role of our treasury team is to find capital to enable the market opportunity – funding does not drive the customer solution.

Having strong capital, spare cash and the MTN programme enable us to establish new businesses and demonstrate performance before going to capital markets. It also means we can, to some extent, supply the type of issuance investors want at any point in time. Sometimes they seek prime risk, at other times – because margins have tightened, as is the case now – they seek the yield offered by nonconforming collateral.

In the type of market that is likely to be characterised by volatility and that is more capital constrained, we are delighted to be the type of issuer that has the flexibility provided by diverse lending books and funding options.