Credit Corp prepared for a return to growth

Tuesday, 28 Jul 2020

Credit Corp Group Limited released its FY2020 results to the market this morning.

Key points

Credit Corp Group Limited (Credit Corp or the Company) reports:  


  • FY2020 net profit after tax (NPAT) of $15.5 million after accounting for the impairment of purchased debt ledger (PDL) assets and additional provisioning arising from the impact of COVID-19
  • NPAT before these adjustments of $79.6 million - 13 per cent above the prior year
  • The proven ability to operate effectively during COVID-19 isolation and lockdown periods
  • A strong balance sheet comprising of cash and undrawn lines totaling $400 million, together with an outlook for free cash flow of $175 million inFY2021
  • Renewed interest in debt sale from credit issuers and the prospect of increased sale volumes


Steps taken to adapt to the impacts of COVID-19

PDL pricing models and consumer lending criteria have been adjusted to account for persistently high levels of unemployment, in excess of 10 per cent, and a reduction in government support, stimulus measures and private sector forbearance (temporary support) over time. Credit Corp is now pricing PDLs and issuing consumer loans at these adjusted settings.

These settings have been applied to the carrying value of the Company’s financial assets and the net economic benefit of its ongoing purchasing commitments. This has given rise to charges for impairment and provisions in Credit Corp’s FY2020 results, reducing reported NPAT by $64.1 million.

The Company has effectively transitioned to a combination of work-from-home and office-based activity across all locations. This has enabled Credit Corp to adapt to isolation and lockdown periods while maintaining operational capacity and effectiveness. This helped produce NPAT before COVID-19 adjustments of $79.6 million, which was 13 per cent above the prior year.

To meet heightened expectations of conduct Credit Corp has supplemented its leading approach to hardship with additional temporary measures. These have included an interest freeze on all debt purchase accounts, repayment moratoriums and the suspension of legal, repossession and credit reporting activity.

To facilitate continued purchasing and lending over an extended period of uncertainty and prepare for opportunity, Credit Corp has strengthened its balance sheet. Over the second half of FY2020 the

Company generated $110 million in free cash flow, which was supplemented with a $152 million equity raising. Credit Corp is now debt free, with $400 million in cash and undrawn credit lines.

Recent operating experience and outlook


Collections experience over recent months has returned to pre-COVID expectations, with an uncharacteristically high incidence of one-off repayments. The Company does not expect this to continue as temporary support is reduced over time.

While there has been some recovery in lending demand over recent months, the consumer loan book has experienced significant run-off. The Company expects, however, that the loan book will further stabilise as lending demand increases in line with the ongoing withdrawal of temporary support.

Recent discussions with major clients in all jurisdictions show an increased interest in debt sale, with some clients in the United States anticipating growth in sale volumes of up to 80 per cent in 6 to 12 months’ time. While this is positive, for Credit Corp to fully participate, pricing will need to adjust in accordance with the medium-term outlook for collections.

This media release should be read in conjunction with Appendix 4D, Consolidated Interim Financial Statements and results presentation.
To watch the presentation go to: 

WGEA Report 2019/2020

Wednesday, 15 Jul 2020

In accordance with the requirements of the Workplace Gender Equality Act 2012 (Act), on 19 June 2020, Credit Corp lodged its annual public report with the Workplace Gender Equality Agency.

Click here to view the report.

FY2020 Unaudited results update

Monday, 13 Jul 2020

Key points

  • FY2020 net profit after tax (NPAT) of Credit Corp (the Company) is expected to be in the range of $10-15 million after accounting for the impairment of purchased debt ledger (PDL) assets and additional provisioning arising from the impact of the COVID-19 pandemic.
  • NPAT before these adjustments is expected to be in the range of $75-80million.
  • Credit Corp enters FY2021 in a strong position with no net debt and undrawn lines of $375million.


COVID-19 experience and outlook
In the period since the initial implementation of isolation measures across most jurisdictions from late March 2020 the Company’s customers have been less prepared to agree and maintain longer term repayment plans. This initially produced a sharp decline in collections and rising loan book arrears. More recently, an increased willingness to make one-off repayments has brought PDL collections for May and June back to pre-COVID levels and, with the exception of auto and SME pilots, has restored loan book arrears.

This experience is consistent with reported unemployment rates in excess of 10 per cent, after adjusting for changes in workforce participation, and the temporarily offsetting impact of government support, stimulus measures and private sector forbearance (temporary support).

Credit Corp expects persistently elevated levels of unemployment, the impact of which will be more severe for the Company’s credit-impaired customers, who are more exposed to the risk of unemployment for a prolonged period. As temporary support is reduced, PDL collections will fall while loan book arrears will rise.

The Company’s response has been to seek to renegotiate ongoing purchasing arrangements onto more sustainable pricing, better reflecting the outlook for collections from freshly purchased PDLs. In the lending segment, auto and SME pilots have been suspended while lending criteria for the core loan product have been tightened, halving approval rates.

Credit Corp’s approach to assessing the carrying value of its financial assets and the net economic benefit of its ongoing purchasing commitments is consistent with this outlook and response.

View full Media Release here

COVID-19 - Credit Corp withdraws FY20 guidance

Friday, 20 Mar 2020

Credit Corp Group Limited (Credit Corp) advises today that it is withdrawing its 2020 earnings and investment guidance due to uncertain impacts arising from the spread of coronavirus (COVID-19).

These impacts include the potential for increased restrictions on the availability of Credit Corp’s workforce as well as the prospect of a deterioration in economic conditions which may reduce the capacity of customers to make repayments.

The company has continued to perform strongly over recent weeks and no material impacts arising from COVID-19 have yet been observed in operating results.

Credit Corp has a proven and industry-leading approach to customer hardship which delivers strong business results and sustainable consumer outcomes. The company will continue to apply this approach in circumstances of increased demand for these capabilities by the company’s major credit issuer clients.

Credit Corp’s balance sheet and funding positions are strong, with $170 million of cash and undrawn credit lines currently available under facility agreements that mature in 2022 and 2023. Gearing remains conservative. Credit Corp is well positioned to secure favourable investment opportunities as and when they arise.

Credit Corp reports first half profit growth of 15%

Tuesday, 28 Jan 2020

Credit Corp Group Limited (Credit Corp) reports the following highlights for the first half of the 2020 fiscal year:

  • 15% increase in Net Profit after Tax (NPAT) to $38.6 million
  • 13% growth in the consumer loan book to $230 million
  • Impressive US debt buying growth metrics:
    • 57% increase in collections
    • 55% increase in investment
    • 75% increase in headcount
    • Commencement of a second collections facility with 270 seat capacity
  • Baycorp acquisition on track for full-year NPAT of $6m and integration ahead of schedule

All segments grew profits strongly, with the consumer lending and US debt buying businesses each growing first half NPAT by more than 20%. The US debt buying segment remains on track for full-year profit growth of 45% to 65%.

The Australian/New Zealand debt buying segment produced record collections and NPAT, with strong results from the existing business complemented by the performance of the acquired Baycorp assets. Credit Corp grew purchased debt ledger (PDL) market share late in the first half, bringing the pipeline of contracted Australian/New Zealand purchasing within the previous full-year guidance range.

Mr Thomas Beregi, CEO of Credit Corp said that these outcomes were attributable to effective operations and superior compliance credentials. “The integration of strong operations with leadership in sustainable collection practices makes Credit Corp a very compelling proposition for Australian and New Zealand credit issuers” he said.
The Baycorp acquisition is on track to achieve business case outcomes. The integration is ahead of schedule, with actions taken to date realising $13 million in annualised cost savings and ensuring that the agency businesses in both Australia and New Zealand are operating profitably.

Consumer lending has had a strong start, with the loan book up by 13% over the same point in the prior year. Mr Beregi highlighted ongoing growth in the Wallet Wizard customer base. “We have followed up last year’s unexpectedly strong growth in new customer volume with another 8% more new customer volume growth. Wallet Wizard is now well-known as the most sustainable product in its segment and the absence of any ongoing fees means that it can be cheaper than many prime credit card offerings.”

Credit Corp’s focus in the US has been on expanding productive capacity to match investment growth over a prolonged period. Expanded capacity helped deliver collections growth of 57% over the same period in the prior year. The commencement of a second facility in Washington State will ensure that productive capacity continues to grow to meet the US market opportunity.

Mr Beregi noted that despite the adverse impact of substantial recruitment on efficiency, Credit Corp continued to achieve operating metrics comparable to those achieved by the long-established publicly traded debt buyers. “We have recruited rapidly over the past 8 months and our operating metrics remain in line with those of our competitors. This provides us with the confidence that we have a platform in place that will enable us to achieve our strategic objectives in the US” he said.

Outlook for balance of 2020

The company provided upgraded guidance with the acquisition of Baycorp in August 2019 and now confirms 15% to 18% growth in NPAT for fiscal 2020. The acquisition and all business segments have performed strongly over the first half and remain on track. With an increased PDL investment pipeline in both Australia/New Zealand and the US, the PDL investment guidance range has been tightened to a range of $310 to $320 million.

This media release should be read in conjunction with Appendix 4D, Consolidated Interim Financial Statements and results presentation.
To watch the presentation go to: