Latitude CEO Bob Belan
Latitude Financial says it is bouncing back from the cyber attack it suffered in March.
Rebuilding margins and volumes and getting on top of a spike in arrears, Latitude inevitably reported a hefty loss for the half year to June 2023, its cost line blown aside by all the cyber incident expenses.
Latitude’s statutory loss after tax was A$98.2 million, in line with guidance. Including discontinued operations, the loss after tax was $116.3 million.
Cash NPAT from continuing operations was $7.0 million, down 88 per cent over six months, and down 92 per cent over a year.
“The combined impacts of unprecedented interest rate rises in Australia and New Zealand, along with the March 2023 cyber incident resulted in higher charge offs, lower receivables and costs of $75.9 million pre-tax,” Latitude said.
This resulted in “a materially negative impact on both earnings and the balance sheet for the first half of 2023”.
Latitude’s two key business units across Australia and New comprise sales finance (instalments), credit cards, dubbed PAY, and personal loans and car loans, known to the firm as MONEY.
Volumes fell 15 per cent over six months and by three per cent over a year.
Receivables fell six per cent to $.6.3 billion.
Net charge offs were up 43 per cent to $105 million.
In what should have been a highly favourable year for margins (given the business mix), Latitude’s margins fell 145 bps to 9.8 per cent over the year to June.
LFS said it “delayed margin actions” since March. On the other hand, it claims to be “protecting margins over the long term”.
Since the blow from the cyber incident, Latitude has rebuilt its margin each month, with an exit “operating income margin” of 15.72 per cent.
“The cyber incident was a material set back to volumes and margins. As the recovery gains momentum, planned initiatives are implemented and cash rates likely nearing the terminal point, we expect interest income yields to improve further,” Latitude said.
In one piece of good news “the integration of the Q2 platform continues to progress well with all products now originated via Q2”.