Money3 capitalises on payday lending industry consolidation

Money3's transformation from a specialist short-term lending operation to a more diversified financial services business is proceeding smoothly, with the company reporting another big increase in earnings.

The company made a net profit of A$7.3 million for the six months to December - an increase of 135 per cent over the previous corresponding period. Revenue increased by 68 per cent to $32.4 million.

The company has two divisions - secured and unsecured lending. Unsecured loans are between $1000 and $5000 offered for short terms.

Secured loans are between $2000 and $40,000 and are used to purchase an asset (usually a car).

It describes its products as loans suitable for consumers who cannot access funding from traditional lenders.

Total debtors grew by 44 per cent to $104.9 million.

Bad debts rose from $2.7 million in the December half in 2013 to $4.7 million in the latest half.

Money3 has taken advantage of consolidation in the payday lending market (an outcome of tighter regulation of the industry) by making a couple of acquisitions. In December it purchased several assets of Paid International.

In 2013 it bought the assets of a payday lender, Cash Store, from its administrator. It re-branded 33 Cash Store branches, taking its network to 70 branches.

The business is well funded. In December it raised $20 million via a placement to sophisticated and institutional investors.