Cash Converters has put two years of losses behind it, reporting a net profit of A$16.2 million for the year to June. But a combination of weaker demand and tighter lending standards resulted in a drop in loan originations.

Like many consumer lenders, the company reported that government COVID stimulus measures led to reduced borrower demand and higher repayments in the December half, followed by a recovery in demand in the second half.

Overall, demand was weaker and the company tightened its pricing and risk settings. Personal finance originations fell 4.4 per cent to $220.8 million and vehicle finance originations fell 64 per cent to $6.7 million.

The personal loan book finished the year up 28.5 per cent at $133.8 million and the vehicle finance book fell 28 per cent to $44.3 million.

Lockdowns in Australia and the UK meant that the Cash Converters stores had about 10 per cent fewer trading days.

Revenue for the year fell 23.2 per cent to $201.3 million. Personal lending contributed $72.7 million (down from $102.3 million the previous year), vehicle finance contributed $13.4 million (down from $18.5 million), store operations contributed $102.7 million (down from $123.9 million) and franchise operations contributed $12.4 million (down from $16.9 million).

In 2019/20 Cash Converters paid $42.5 million to settle a class action claim. This was the main reason the company made a loss that year.

Without that cost and with a reduction in employee and administrative expenses, it returned to profit.

Another positive was that the credit impairment charge came down from 18.3 per cent to 15.6 per cent.