Credit Corp CEO Thomas Beregi
Debt buyer and lender Credit Corp made a loss in six months to December after increased delinquencies in its US purchased debt ledger book triggered an impairment of US PDL assets.
Credit Corp released its December 2023 half results yesterday, reporting a loss of A$12.1 million, compared with a profit of $31.8 million in the previous corresponding period.
The big contributor to the loss was a $64.9 million change in lifetime expected PDL credit losses, representing a 14 per cent impairment of the US PDL book.
Among the company’s operating segments, the US PDL business made a loss of $51.5 million.
The problem in the US business was first reported last October, when the company said there was a “sustained deterioration in collection conditions” in its US business on account of “increased US repayment plan delinquency”.
The Australian and New Zealand PDL business reported increased revenue but segment profit was down from $35.2 million in the six months to December 2022 to $26.8 million in the latest half.
The consumer lending business was the star performer. The loan book grew 16 per cent to a closing balance of $414 million, segment revenue increased 25.4 per cent to $81.9 million and profit was up three-fold to $24.7 million.
Credit Corp chief executive Thomas Beregi said the loan book grew to a record level despite tighter credit settings. Arrears fell to a 12-month low of just over 1 per cent. Wallet Wizard branded loans accounted for 90 per cent of the volume.
Beregi said PDL supply in Australia and New Zealand remained constrained, with no indication of a recovery in the short term. PDL investment in 2023/23 is likely to be below 2022/23 purchases – the third consecutive year of contraction.
The US PDL pipeline is also below previous years, although pricing has improved and supply has started to pick up.
At the end of December, the face value of total PDL portfolios was $12.9 billion, compared with $12.7 billion in December 2022.
The company said that underlying net profit for the half, after excluding the impact of the impairment charge, was $33.5 million – an increase of 5 per cent over the previous corresponding period.