“Considered pricing actions” over the last year have buttressed a turnaround in earnings at Latitude Financial Services, even if the statutory net profit for the half was minimal at $2 million.
On a continuing operations basis, Latitude’s net profit was $9.0 million, compared with a heavy loss of $92 million in the first half of 2023 and a loss of $10 million in the second half of the last calendar year.
The cash NPAT from continuing operations was $27.4 million, up 69 per cent half on half, and up 140 per cent year on year.
In early 2023 Latitude was blown off course by one of the most material cyber breaches to affect any business in Australia.
Since then, it seems Latitude has been disciplined in reviving volumes, growth in receivables and the bottom line.
The latest half has seen “the continuation and acceleration of volume momentum experienced in late 2023” with volume up 14 per cent over the year.
The firm said loan originations in its Money division of $1.02 billion were up by 25 per cent over six months and up by 60 per cent over a year.
It said it produced a margin expansion over the half in a range from 30bps to 50bps.
In its Pay, meaning cards, division Latitude said card spending jumped to $1.96 billion in this half, from $1.5 billion in the same half in 2023.
The interest income yield from Pay lifted by 34bps, thanks to increases in interest rates and fees.
Latitude even said “the macro environment [is] supporting consumer demand for credit” by which they really mean financial stress amid their target market is so pronounced, their new customers, even more than before, are those scrounging round for credit.
This will air doubts around Latitude’s asset quality going forward, though for now things are in fair order.
Arrears of 30 days or more were 3.74 per cent t June 2024, up from 3.50 per cent over the quarter and a down from a recent high of 3.9 per cent.
Arrears of 90 days or more were 1.15 per cent a following a pattern similar to 30 day arrears.
Latitude said credit losses were “normalising to long term averages” at 3.52 per cent.
An increase in charge offs will be baked into budgets, being a function of higher interest rates and wider margins across its portfolio.