Credit Corp Group Limited - FY2024 Results and FY2025 Outlook

FY2024 Performance Highlights

Credit Corp Group Limited (Credit Corp) has reported a robust performance for the fiscal year 2024. The company saw an 18% growth in its lending segment net profit after tax (NPAT) and a 24% increase in its consumer loan book, reaching a record gross closing balance of $445 million. Despite challenges in its core AU/NZ debt buying business and degraded US collection conditions, the company managed to deliver strong results.

Underlying NPAT fell by 11% to $81.2 million compared to the previous year. However, the lending segment's strong performance helped offset some of the negative impacts. The US operational performance improved significantly in the final quarter of FY2024, with record quarterly collections 6% higher than the prior comparative period.

US Market Performance

The US market showed promising signs of recovery, with improved customer contact and higher conversion rates into paying outcomes. Enhanced management of the legal collection channel also contributed to the positive results. According to Mr. Thomas Beregi, Managing Director and CEO, the operational improvements have made Credit Corp more competitive in the market.

Purchasing conditions in the US remain favorable, with steady pricing and an expected increase in supply over the near term. While collection conditions have remained static, the outlook for US credit-impaired consumers remains uncertain.

Consumer Lending and AU/NZ Market

The consumer lending book grew to a record $445 million, with significant growth throughout FY2024. However, settled volumes were below expectations for the final quarter, and more modest book growth is expected in FY2025. This is anticipated to translate into a 27% increase in lending segment NPAT as higher interest income is realized on the record starting loan book.

The AU/NZ debt buying market has remained subdued, with sale volumes still substantially lower than pre-COVID levels. Despite this, Credit Corp secured the highest direct-from-issuer investment volume in AU/NZ since FY2020. Segment earnings are expected to stabilize in FY2025, with no significant decline anticipated.

Financial Stability and Future Outlook

Credit Corp extended and increased its banking facilities, with limits rising to $505 million. This includes a consumer lending warehouse of $250 million expiring in October 2028 and a $255 million syndicated corporate facility expiring in July 2029. Although funding costs have increased, the amended facility provides medium-term funding certainty.

Credit Corp will pay a final dividend of 23 cents per share for FY2024, representing a full-year payout ratio of 51%. The company has provided guidance for FY2025, with expected NPAT in the range of $90-100 million, a 17% increase at the midpoint compared to FY2024.