Credit Corp sees stable repayments in calmer foreclosure

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Mr Beregi said that one possible reason was that employers and people have adapted and the job market has remained vibrant. That meant worries about losing jobs or being unable to find a new job were less pressing than when the coronavirus started last year.

Yet people remain conservative in handling new finances. Credit Corp noted that demand for its lending products – which include Wallet Wizard small loans – fell about 10% in July. A drop had also occurred during previous closings and Mr Beregi was optimistic the situation would reverse once conditions stabilized.

Profits jump

He spoke as Credit Corp posted an annual profit of $ 88.1 million, a significant increase from last year’s $ 15.5 million result impacted by the pandemic. Excluding the negative impacts of COVID-19, Credit Corp estimated profits rose 11%.

A final dividend of 36 will be paid. Mr Beregi has received a hefty compensation of $ 2.5 million, although $ 1.1 million is long-term bonuses that depend on future goals achieved.

Credit Corp, which employs 1,700 people and has 2.2 million customers, operates in Australia and the United States. Its debt collection arm acquires slices of money owed from banks or electric utilities. He buys these books of debt for less than the loan value, with the aim of profiting by raising more money.

Mr Beregi said the most significant turnaround has occurred in the United States, with revenues there more than doubling after removing the impacts of COVID-19. Australia’s debt collection revenue rose 11%, with Mr Beregi saying one factor was the purchase of $ 160 million of debt registers from struggling rival Collection House at the end of the year last.

The results showed that contributing factors included significant reductions in financing, collection and personnel costs.

The industry is notorious for a high staff turnover rate, and Mr. Beregi said Credit Corp would like to have more employees. But he said the difficulty of training people from home and limiting office space limited recruitment, while support programs in the United States were high enough to deter people from looking for work.

Profit outlook

The company’s stock price jumped and fell 10 to $ 28.52 by early afternoon. The earnings outlook for this year had a wide range, ranging from a slight decline from the last result to $ 85 million to $ 95 million.

Mr Beregi said Credit Corp “is going to pull as close as possible to be near the top of that range,” but said the outlook also recognizes “it is an uncertain time.”

The company’s purchase debt ledgers ended with a book value of $ 466 million, up from $ 422 million. Mr Beregi said the depreciation rate on ledgers has remained stable at around 46%.

While the overall outlook was stable to optimistic, Credit Corp predicted it would buy less than $ 50 million in new pounds of debt in Australia and New Zealand this fiscal year, one of the lowest levels since at least four years.

“The volumes are low, mainly due to the various forbearance programs put in place by the banks, where people may have temporarily lost their jobs or have followed a repayment moratorium,” Beregi said.

This meant that banks weren’t offloading their ledgers to debt collection companies. As this situation gradually improved, Beregi said it would remain a “slow process” for the next six to twelve months.

But the flip side was that US purchases would be much larger, with market watchers seeing the North American market as a positive factor as Credit Corp expands in that region. Credit Corp is aiming for a medium-term goal of $ 200 million in annual purchases on the US debt ledger.

Collection House provided a grim fourth-quarter update last week, saying debt collection work on behalf of other companies – another line of collection work – remained subdued. Some companies or organizations were granting forbearance while “contact restrictions implemented by customers in relation to recent lockdowns in New South Wales and Victoria” also slowed recovery of funds, he said. declared.

Brisbane-based Collection House reported operating cash consumption of $ 2.7 million for the quarter. He had about $ 7.3 million in cash left over and is expected to release annual results at the end of this month.


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