While much of the profit growth was attributable to the fast-growing consumer lending division and the turnaround to profitability in the US, the core Australian and New Zealand debt buying operation also grew earnings.
Mr Thomas Beregi, CEO of Credit Corp, said the result demonstrates the success of the company’s organic growth strategy pursued over a number of years. “It is pleasing that close to 30 per cent of earnings in 2018 will be derived from the lending and US debt purchasing businesses we have established from scratch over the last five years” he said.
Profits in the core Australia and New Zealand debt buying business increased by 5% and collections by 4% in the first half, despite a 30% reduction in purchasing. Mr Beregi said the collections performance reflected the strength of Credit Corp’s operating model. “To grow collections with significantly reduced purchasing demonstrates the strength and sustainability of our collection operation, in particular the merit of our emphasis on building and maintaining a large bank of recurring payment arrangements” he said. Credit Corp grew its 2018 contracted debt ledger pipeline from $75 million at the start of the year to $190 million due to large spot purchases and the rollover of existing forward flow contracts.
Notwithstanding this, Mr Beregi believes the core Australia / New Zealand market remains competitive. “Competitors continue to enjoy access to debt and equity capital to support increased investment” he said. Credit Corp’s pricing discipline has reduced purchasing, but will preserve investment returns.
Credit Corp’s unique cash loan product, ‘Wallet Wizard’, continued to grow. Total settled volumes in the first half were higher than the prior year and profits are on track to grow by 30% for the full year.
Mr Beregi said that consumers benefit from Credit Corp’s unique competitive strengths including its collections capability, deep understanding of the segment and efficient operations which allow low pricing to be sustained. “Almost 200,000 customers have saved substantial amounts as a consequence of choosing Wallet Wizard” he said.
The US debt purchase business produced its initial half-year profit. Productivity was maintained in line with the prior year despite a 40% increase in headcount.
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