The Australian and New Zealand debt buying market contracted further in the second half of last year, as the effect of COVID stimulus measures continued to be felt.

Debt buyer and lender Credit Corp released its financial results for the six months to December, reporting that its Australian and New Zealand purchased debt ledger ran off during the half-year.

Credit Corp chief executive Thomas Beregi said: “We have increased our share but the market has contracted. There aren’t any signs of a short-term recovery. Continued runoff from this segment can be expected.”

The face value of Credit Corp’s Australian and New Zealand purchased debt portfolio has fallen from a peak of A$8.6 billion in the December half 2020 to $7.9 billion in the latest half. The number of accounts has fallen from 1.4 million to 1.2 million over the same period.

Australian and New Zealand debt purchasing is the company’s biggest segment. Revenue fell 8.9 per cent from $118.7 million in the December half 2021 to $108.1 million in the latest half. Segment profit was down 26.7 per cent to $35.2 million.

Revenue from US debt purchasing was up 9.7 per cent to $48.9 million and revenue from consumer lending (mainly through its Wallet Wizard brand) was up 54.5 per cent to $65.4 million.

However, revenue growth in these segments did not help the company’s bottom line. Higher revenue from the US business was offset by increased resourcing to service recent debt purchases. 

The consumer loan book grew 32 per cent to $331 million. Upfront provisioning and marketing expenses related to this growth cut into earnings.

December half net profit fell by 30 per cent to $31.8 million.

Beregi said the June half would be better. Loan book growth will moderate, reducing origination costs. He expects US collections to improve as increased resourcing translates into collections.

Credit Corp will also get an earnings benefit from the Collection House and Radio Rentals businesses it bought last year.