Cash Converters chief welcomes new licensing regime
The payday and micro lending industry serves 500,000 to 600,000 consumers, according to the latest figures from the National Financial Services Federation.
The market leader is Cash Converters, which has seen its share price almost double in the last six months. Cash Converters boast about 285,000 customers annually.
The Cash Converters Financial Services division delivered an operating profit of $8.6 million in the six months to December with its loan book growing by 12 per cent. Interest received from personal lending was around five million dollars for the half year.
Cash Converters chief executive Ian Day said the company was looking forward to reaping the market benefits of the new Consumer Credit Code.
"We have been very supportive of these measures for a very long time. We think that the licensing regime, both pro-active and reactive, is the way to go; people should have to jump through hoops to show they are worthy of getting a license.
"We have a good brand - our customers like our brand," said Day.
"The reality is there is always a need for short-term credit and there is a large body of people out there who aren't serviced by mainstream lenders and we are going to expand our [financial services] product range."
Last week Cash Converters told the ASX it had no explanation for the recent jump in share price from 32 cents to 38 cents.
Also last week National Australia Bank sent through the third progress report on its micro-lending project with MoneyFast -"Fairer Lending on the Fringe".
The report finds that for smaller loans the break-even interest rate is about 46 per cent per annum. The smallest loan in the project's portfolio is $1000, with the cost of administering the loans higher than expected at $299 per loan.