Credit Corp back buying debt

Consumer credit arrears in the banking system may be improving, but one of the specialist debt collectors helping out banks expects its profits to rise by more than forecast this year as it picks up more work.

Credit Corp CEO Thomas Beregi told its annual meeting yesterday that the firm upgraded its forecast for EBITDA for the 2010 financial year to between $94 million and $98 million, and a rise of $6 million at each end of the range.

Beregi said the firm was expecting a net profit of between $12 million to $13.5 million, up by $1 million at the low end and by half a million at the high end.

In remarks published through the ASX, Beregi, and the company's chair, Donald McLay, emphasised the unused borrowing capacity available and their plans to work more closely with bank and other customers to pursue overdue debts.

The plan to buy more debt outright (rather than collecting it on an agency basis) was one reason for Credit Corp's intention to pay out only 20 per cent of profits as dividends, McLay said.

"We believe that we are operating in a relatively positive [debt] purchasing environment and we are deliberately preserving our capital to facilitate increased purchasing at favourable returns," McLay said.