Latitude Group’s annual profit more than triples to $160m amid ‘revenge spend’ post Covid lockdowns

The non-bank lender, led by Ahmed Fahour, expects consumer spending to return to pre-pandemic levels as confidence improves.

Latitude Group, led by Ahmed Fahour, expects consumer spending to return to pre-pandemic levels as confidence improves. Picture: Ian Currie/NCA NewsWire

Latitude Group expects consumer spending to return to pre-pandemic levels as confidence picks up, with spending activity already on the rise following “self-imposed lockdowns” through December and January, according to boss Ahmed Fahour.

The former Australia Post CEO, who has been at the helm at Latitude since 2018 and led the company through its initial public offering in mid-2021, said the non-bank lender was on track for a record February following the quieter weeks that hit the economy either side of Christmas and New Year.

“Essentially we had this V-shaped economy. November was amazing, then December was a month of two halves, where the first half was okay but the second half was not so great. And then all the sudden the economy took a hit at Christmas and over the first couple weeks of January, when people opted for self-imposed lockdowns and we had severe labour shortages.

“By the end of January, it started to bounce back and then all of a sudden in the first couple of weeks of February, people are starting to get back to work, back to school and we’re seeing green shoots that are very positive,” Mr Fahour told The Australian.

ASX-listed Latitude is currently the number two lender in the local market for unsecured personal loans, sitting behind CBA.

Mr Fahour, who predicted a “revenge spend” in 2021, said he still underestimated the strength of the consumer once lockdowns eased.

“We had a record result leading into November. January wasn’t great but if February continues the way it has been then we’re on track for another record month,” he said.

For the 12 months through to December 31, Latitude more than tripled its net profit to $160m, up from $45m a year earlier. Annual cash profit rose 4 per cent to $232m, while operating expenses fell 4 per cent to $387m.

Total volume rose 4.3 per cent over the year, to $7.3bn, with personal and auto loans volume up 46 per cent in Australia and 27 per cent in New Zealand.

Mr Fahour said he was “blown away” by the performance of the auto and personal loan segments. The growth is set to accelerate this year, he added.

“We are making big investments in technology, getting the cash (to customers) within 24 hours, and this is where the future is. We are very focused on that and the acquisition of Symple will accelerate our progress.”

By April, all of the group’s personal loan originations will flow onto Symple’s platform, hastening the company’s growth, he told an analyst briefing earlier on Monday. Latitude acquired lender Symple in late 2o21.

“Today’s result demonstrates that Latitude is a highly profitable and disciplined business with a positive outlook, and we continue to add to our significant capability and scale,” Mr Fahour said.

Humm’s consumer finance business was “another exciting acquisition”, he added.

“With Symple we got a great tech platform that basically stopped having to spend two to three years investing in a modern receivables platform.

“With the Humm consumer business, not only will it deliver to us $100m profit before tax, but it delivers, in addition, a great brand, 60,000 merchants, 2.6 million customers in addition to our 2.8 million customer accounts, and allows us to cross sell even more personal loans than what we do in our existing portfolio.

“So it’s really exciting and sets up an amazing 2023 for this organisation.”

Latitude last month announced its intention to acquire Humm’s consumer finance business for 150 million shares and $35m cash.

Latitude declared a final dividend of 7.85c a share fully franked.

It shares rose as much as 3 per cent before ending down 1 per cent at $2.02.