Credit Corp reported a slide in profits despite strong growth in its lending segment. The company’s lending segment net profit after tax (NPAT) experienced a significant 70% year-on-year increase. This growth, however, was offset by ongoing run-off in its core AU/NZ debt buying business and increased costs associated with its US operations.
On the positive side, Credit Corp saw a 43% increase in its consumer loan book, which reached a record high gross closing balance of $358 million. Despite this growth, the company carefully managed the volume of longer-duration auto loans to mitigate potential risks in case of economic downturns.
Credit Corp also noted a recovery in its operational performance in the United States in the second half of FY 2023. However, the company acknowledged that collection conditions may have deteriorated in the final quarter, with increased delinquency in repayment plans.
Looking ahead, Credit Corp expects its record starting loan book to drive strong earnings growth in the lending segment for FY 2024. The company’s management has predicted a 4% increase in earnings growth. In its FY 2024 guidance, Credit Corp forecasted NPAT between $90 million and $100 million, with earnings per share ranging from $1.32 to $1.47.
Despite a significant decline in its share price, Credit Corp remains up 10% for the year 2023.
Credit Corp CEO, Thomas Beregi, highlighted the importance of continued operational improvement and competitiveness in the uncertain US market. He expressed confidence that such improvements would support higher levels of future investment.
This news reflects both positive and negative developments for Credit Corp. While the company experienced strong growth in its lending segment, the decline in profits and potential collection challenges have impacted its share price. However, with a record loan book and optimistic earnings forecast for FY 2024, Credit Corp aims to maintain its growth trajectory.
