Personal lending growing strongly in the payday lending market

Banks' personal loan and credit card portfolios have barely grown over the past six months  - but in the payday lending sector it is a different story.

Cash Converters reported record lending volumes for personal loans and cash advances over the six months to December. Personal loans of A$23 million were up 25.5 per cent on the previous corresponding period and cash advances of $24.2 million were up 7.7 per cent.

The size of the Australian loan book grew by 22.7 per cent, from $94.3 million in December 2013 to $115.7 million in the latest half.

The size of the company's UK personal loan book fell by 8.4 per cent to £14.4 million.

Cash Converters managing director Peter Cumins said in a statement that strong growth in the local loan book was due to the successful implementation of the company's online lending platform.

Group revenue for the half rose 20.5 per cent to $187.7 million.

The company made a loss of $5.3 million due to the accounting treatment of the termination of an agency agreement, which resulted in a $29.6 million charge.

On an adjusted basis, excluding the charge, the cash profit for the half was $15.3 million, compared with $9.9 million for the previous corresponding period.

Cumins said the termination of the agency agreement would save more than $5 million a year in commissions.

The car leasing division, Green Light Auto (which trades as Carboodle) had a small increase in revenue but recoded a loss of $2.1 million. The business is four years old and still establishing referral and broker agreements.

The company's Australian pawn broking stores produced an EBITDA of $10.2 million - up 64.3 per cent on the previous corresponding period (largely due to an increase in store numbers). UK stores produced an EBITDA of $242,789 - down 62.7 per cent.