Credit Corp lifts FY net profit as US business stars

Lockdowns have hit Credit Corp lending but the debt collection and loan firm is confident of a return to pre-Covid levels.

Lockdowns have hit Credit Corp’s lending volumes in recent weeks but CEO Thomas Beregi says it’s only temporary. Picture: iStock.

Lockdowns have hit Credit Corp’s lending volumes in recent weeks but the debt collection and lending company is confident it can grow its loan book back to pre-Covid levels, with the recent performance just a short-term blip, according to CEO Thomas Beregi.

For the full year, Credit Corp posted a net profit of $88.1m, an 11 per cent lift on the prior year, as revenue slipped 1 per cent to $374.8m.

Its US business was the key growth contributor for the year, with US segment earnings more than doubling to $17.7m over the 12-month period.

“Our debt buying operations performed well across the board. Our metrics in Australia were strong, with the Collection House purchase producing a great result,” Mr Beregi said.

Covid-19 stimulus payments handed out in the US over the second half of the year had benefited the company, he added.

“While purchased debt ledger supply contracted in the US, we managed to partly offset this by growing our share of the market. We also concluded initial purchases from three new issuers during the year.”

The US business has seen a strong start to the financial year 2022, Mr Beregi said.

“We have secured a record starting pipeline of purchasing, and we can see opportunities to add to this as supply recovers,” he told the market.

“The operating metrics show that our US operation is very competitive. And we know there remains room for even further improvement.”

While the consumer loan book recovered over the second half of the year, Credit Corp saw a significant softening in July on the back of recent lockdowns in multiple states. But Mr Beregi said he believed this would be temporary, with the outlook still positive for the leading business.

“The book is on track to grow back to its pre Covid level and we‘re seeing encouraging results from our relaunched auto loan product,” he said.

Momentum in the lending business will be boosted by new products and it expects to deliver “another strong result” in 2022, Mr Beregi said, as he guided to a net profit of $85m-$95m this year, with the top end of the range representing an 8 per cent increase on the 2021 result, and the bottom end coming in at a 3.4 per cent decline.

Credit Corp will pay a final dividend for the 2021 financial year of 36c per share, representing a full-year payout ratio of 55 per cent.

Credit Corp shares closed up 0.2 per cent at $28.58 against a broader market dip of 0.2 per cent.