Credit Corp reports return to strong growth trajectory

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    Credit Corp Group Limited (Credit Corp or the Company) reports the following highlights for the 2021
    financial year:
     11% increase in net profit after tax (NPAT) over the prior year to $88.1 million 1
     Strong US segment result, with NPAT doubling to $17.7 million
     Near record purchased debt ledger (PDL) investment outlay of $293 million 2
     Record second half gross lending volume of $105 million
     Record committed FY2022 starting PDL investment pipeline of $150 million
     Substantial investment capacity with cash and undrawn lines totaling $372 million
    Despite challenging market conditions all segments exceeded full year expectations and finished the
    year with significant investment momentum for sustained earnings growth.
    Aus/NZ PDL collections were within 4% of FY2020’s stimulus-induced result. This was achieved with
    limited organic purchasing as a consequence of reduced PDL supply arising from the temporary impact
    of COVID stimulus and forbearance on charge off volumes. Acquisition of the Collection House PDL
    book contributed to the collection result and helped produce lifts in segment productivity and earnings of
    9% and 11%, respectively.
    Mr Thomas Beregi, CEO of Credit Corp, said that the Collection House PDL purchase brought together
    the Company’s operating strengths. “We used our analytical ability to provide a great price, our
    operational capability to promptly integrate and uplift collections from the largest individual PDL
    transaction in Australian history and our financial capacity to secure timely completion of the opportunity”
    he said. After seven months the purchase continues to perform to expectations.
    The US debt buying business was the biggest single contributor to earnings growth in 2021. Operational
    improvement combined with several years of elevated purchasing and a strong consumer position to
    produce a 26% increase in collections. To offset a temporary contraction in market sale volumes arising
    from COVID stimulus and forbearance the Company grew share across its diverse range of purchasing
    relationships, completing acquisitions from three new credit issuers during the year.

    1 After adding back the after tax impact of purchased debt ledger (PDL) impairment and additional provisioning associated with
    COVID-19 to the prior year comparative
    2
    Includes $146 million outlay for Collection House PDL purchase
    A re-fit of the Washington State office was completed late in the year, boosting US operational capacity
    to 700 seats as a platform for a further step-up in purchasing and earnings growth. Unsecured credit has
    returned to growth and charge-off volumes are rising.
    Mr Beregi said that the Company’s US operation was very competitive and would continue to be a key
    driver of earnings growth. “Our tightly integrated US platform has the operational effectiveness and
    infrastructure required to achieve, and surpass, our medium term objective of $200 million in annual US
    PDL investment” he said.
    As stimulus was withdrawn the lending business experienced a rapid increase in demand, particularly
    from returning customers. This was supplemented with rising new customer volume when approval
    criteria returned to pre-COVID settings at the start of the fourth quarter. Gross lending exceeded preCOVID levels over the second half 3
    . Arrears and losses remain at historic lows, but this is not expected
    to continue and the Company has provisioned accordingly.
    The auto loan product was relaunched in the fourth quarter and produced encouraging early volumes.
    Other new products are either in pilot or in development for pilot commencement during FY2022.
    Final dividend
    Credit Corp will pay a final dividend for the 2021 financial year of 36 cents per share which represents a
    full year payout ratio for FY2021 of 55 per cent.
    Outlook and guidance
    Credit Corp enters FY2022 with considerable momentum, having invested heavily during FY2021 and
    secured a record committed starting PDL investment pipeline for FY2022. Charge off volumes are
    growing across all markets and the Company anticipates further opportunities to grow purchasing over
    the course of the year. This anticipated increase in organic PDL investment, together with the ongoing
    impact of the Collection House PDL acquisition is expected to produce solid earnings growth of 8 per
    cent at the top end of the guidance range.
    Credit Corp presents FY2022 guidance in accordance with the following ranges:
    Guidance
    PDL acquisitions $200 - $240m
    Net lending volumes $45 - $55m
    NPAT $85 - $95m
    EPS 126 - 141 cents
    This media release should be read in conjunction with the Appendix 4E, Consolidated Financial
    Statements and results presentation.

    courtesy of Bell Direct
    =====================================================================================

    DYOR

    i hold CCP 'free-carried' )

  2. 83.9k
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    Credit Corp reports first half profit growth of 8%
    Credit Corp Group Limited (Credit Corp or the Company) reports the following highlights for the first half of the 2022 fiscal year:  8% increase in net profit after tax (NPAT) to $45.7 million1
     9% growth in the consumer loan book over the half to $200 million
     Record half-year investment driven by:
     Step up in US purchased debt ledger (PDL) investment to $150 million+ per annum
     Radio Rentals acquisition
     On track for strong earnings growth across all segments over the full year Secondary purchases of the Collection House and Radio Rentals books grew Aus/NZ PDL segment collections by 6% and NPAT by 5% over the prior corresponding period.
    While market volume remains subdued, organic purchasing continues to recover, reaching its highest level since the start of the pandemic. Mr. Thomas Beregi, CEO of Credit Corp, said that the recently completed Radio Rentals acquisition would sustain collections over the second half in advance of a recovery in organic purchasing. “Credit Corp enjoys strong purchasing relationships and is well-positioned as unsecured credit balances recover and charge-offs normalise,” he said.
    In the US, Credit Corp has grown its market share to offset a contraction in PDL supply arising from the pandemic.
    The Company has secured a full year pipeline of more than $150 million. The outlook is for a strong recovery in PDL supply over the medium term as US consumers rapidly increase their use of unsecured credit. Aus/NZ consumer lending demand accelerated over the December quarter as key markets emerged from COVID lockdown.
    Record monthly originations were recorded in December. High settlement volumes suppressed first-half segment earnings due to up-front expected life-of-loan loss provision expense but produced a $200 million loan book at the close of the period. Higher interest revenue derived from the increased book will produce an improved second-half NPAT. 1 Excluding $4.5 million after-tax US Paycheck Protection Program (PPP) loan forgiveness during H1 FY2022.
    Several lending pilots commenced during the period including the Wizpay Buy Now, Pay Later product, the auto loan re-launch and the US instalment loan pilot. Mr. Beregi noted that the expansion of lending operations will ensure sustained segment earnings growth over the medium and long term. “Acquisition of the Radio Rentals business assets has accelerated our plans to enter the sale of goods by instalment market and adds to the suite of lending pilots already underway.
    All pilots utilise Credit Corp’s leading technology platform including fast online decisioning and superior collections,” he said. Outlook and guidance The Company is on track to grow earnings in all segments after record first-half investment.
    Credit Corp remains debt free with undrawn credit lines intact for any one-off opportunities and continued investment growth as market conditions allow. Investment guidance for FY2022 has been upgraded in accordance with the following ranges:

    Guidance issued Nov-21 Guidance upgraded Feb-22 PDL
    acquisitions $280 - $300m ... $300 - $320m
    Net lending volumes $45 - $55m ...$45 - $55m
    NPAT $92 - $97m... $92 - $97m2
    EPS 137 - 144 cents ... 137 - 144 cents2
    This media release should be read in conjunction with the Appendix 4D and Consolidated Interim Financial Statements and the results presentation.

    2022 Interim dividend (declared, not yet provided at 31 December 2021) 38.0 cents 100%

    DYOR

    i hold CCP ( 'free-carried' ) ( bought @ $6.20 in August 2012 )

    bought as a 'safe-haven' for the 'crash' i thought was coming in mid-2013

    sometimes getting it totally wrong .. is not a bad thing

  3. 83.9k
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    Credit Corp delivers a solid result in challenging conditions
    Credit Corp Group Limited (Credit Corp or the Company) reports the following highlights for the 2022
    financial year:
     9% increase in net profit after tax (NPAT) to $96.2 million 1
     Record annual investment:
    o US purchased debt ledger (PDL) outlay 80% above previous peak (FY2020)
    o Gross lending volume 24% above prior record (FY2019)
     16% increase in US segment NPAT
     Recovery in lending segment earnings and loan book
    PDL supply in the core AUS/NZ debt buying market did not recover. Collections growth was achieved
    from purchases of the Radio Rentals and Collection House New Zealand books. These one-off
    acquisitions offset run-off arising from reduced regular direct-from-issuer investment since the start of the
    pandemic.
    US PDL investment accelerated in the last quarter as existing clients experienced substantial uplifts in
    charge-off volumes. While increased purchasing produced collections growth of 18 per cent, collections
    did not reach levels commensurate with the amount of investment. Performance was adversely impacted
    by a failure to grow the US workforce to required levels in a challenging labour market.
    Various steps have been taken to address this resourcing shortfall. A Philippines-based team comprising
    approximately 100 experienced collectors has commenced contacting US customers. Hiring of remote
    workers in less competitive US labour markets has also started.
    Mr Thomas Beregi, CEO of Credit Corp, said that the US continues to provide a significant runway for
    growth despite the present resourcing constraints. “Market volumes have stepped up in recent months
    and further increases are expected during FY2023. As resource constraints are addressed, this segment
    will support consistent annual investment of more than A$200 million and be capable of producing
    medium-term earnings similar to those of the AUS/NZ operation,” he said.
    Consumer lending demand accelerated over the course of the year. Television advertising was extended
    to capture the opportunity, producing record gross lending volume of $267 million for the year and a
    recovery in the loan book to $251 million gross of provisions.

    1
    Statutory NPAT of $100.7 million includes $4.5 million US Paycheck Protection Program (PPP) loan forgiveness
    Credit loss experience was very favourable. The successful repayment of loans previously provided for
    produced an excess loss provision release of $10.1 million (net of tax). This release offset the impact of
    additional loss expense, in accordance with the Company’s up-front life-of-loan loss provisioning
    approach, arising from record lending volume. The resulting provision remains above both pre-COVID
    levels and historical loss experience to account for any ongoing uncertainty.
    Credit Corp achieved a number of important milestones to secure long-term growth in the consumer
    lending segment. The relaunched auto loan offering produced solid growth, with this component of the
    gross loan book doubling over the year to $34 million. Pilots commenced in buy now pay later and US
    lending. Additional new products reached the final stages of development in FY2022 and are scheduled
    for pilot commencement during FY2023.
    Mr Beregi said that these pilots broaden the product offering and provide alternative pathways for
    customer acquisition and retention. “While the successful Wallet Wizard branded cash loan product has
    achieved significant share of its segment other products target alternative segments and points of
    distribution,” he said.
    Final dividend
    Credit Corp will pay a final dividend for the 2022 financial year of 36 cents per share which represents a
    full year payout ratio for FY2022 of 52 per cent.
    Outlook and guidance
    Leading indicators do not suggest a significant recovery in AUS/NZ regular direct-from-issuer PDL sale
    volumes and US resourcing constraints will not be overcome immediately. In FY2023 growth in US
    segment earnings is not expected to offset the impact of run-off in the AUS/NZ debt buying business.
    While FY2023 has started with a solid investment pipeline, regular investment is expected to moderate
    from the record levels achieved in FY2022. This should release substantial free cash flow, positioning
    the Company to secure any sizeable one-off purchasing opportunities that may arise in an uncertain
    economic environment.
    Credit Corp presents FY2023 guidance in accordance with the following ranges:
    Guidance
    PDL acquisitions $220 - $260m
    Net lending volumes $50 - $60m
    NPAT $90 - $97m
    EPS 133 - 143 cents
    This media release should be read in conjunction with the Appendix 4E, Annual Report and results
    presentation.
    To watch the presentation go to: https://www.creditcorpgroup.com.au/investors/interviews-presentations/

    DYOR

    i hold CCP ( 'free-carried' ) ( bought @ $6.20 in August 2012 )

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