Latitude Group Holdings suffered significant falls in receivables and income in 2021, as cautious consumers battened down the hatches during COVID and paid off their personal loans and credit cards.
Latitude released its results for the 12 months to December yesterday, reporting that the value of average gross receivables fell 7.9 per cent from $6.65 billion in 2020 to $6.4 billion last year.
With the drop in receivables and changes to the pricing of some of its products, operating income fell 11.5 per cent to $827 million.
The company made a profit of $160.3 million, up from $45.2 million in 2020, but the 2020 number was affected by a number of one-off items, including restructuring prior to listing last year.
On a cash basis, earnings rose 4 per cent to $232 million. The increase was due to a fall in the loan impairment expense from $202.8 million in 2020 to $116.2 million last year, and a 4 per cent reduction in operating expenses.
Business volume rose 4.3 per cent to $7.3 billion, driven by personal and auto lending (up 41.6 per cent) and New Zealand instalments (up 10.1 per cent). Australian instalment volume (including buy now pay later) was down.
Latitude chief executive Ahmed Fahour said he is hopeful volumes and receivables will pick up. “Based on the strong rebound in Latitude’s volume post previous lockdowns, including in New South Wales and Victoria in 2021, and with the low unemployment rate, it is expected consumer spending will return to pre-pandemic levels as confidence lifts.
“The resumption of international tourism into Australia provides further optimism and a boost in activity.”
Fahour had almost nothing to say about the company’s buy now pay later operations. The Australian and New Zealand customer base grew 42 per cent to 539,000 but the company reported that local instalment volume was down.
Latitude has been in acquisition mode, taking over fintech Symple during the year. It started moving its loan book to what it said is Symple’s state-of-the-art lending platform.
Latitude said its “time to cash” is an average of 4.5 days for settlements. Its target using Symple’s platform is an average of two days. It said the biggest driver of lending performance is time to cash.
Last week it announced that it has entered into an agreement for the sale of humm’s consumer finance business to Latitude for $335 million.
Fahour said the company is in a “robust” funding position, with drawn borrowings of $5.9 billion across warehouse and ABS facilities, and $2.3 billion available to support growth.