Credit Corp Powers Ahead with 32% NPAT Surge and US Growth Plans
Credit Corp Group has reported a robust 32% rise in underlying NPAT for H1 FY2025, driven by strong US collections and consumer lending growth, while reaffirming its full-year guidance and announcing a healthy interim dividend.
- 32% growth in underlying NPAT to $44.1 million in H1 FY2025
- 12% increase in US collections despite limited new investments
- Consumer lending book grows 5% to a record $465 million
- Interim dividend declared at 32 cents per share
- FY2025 guidance reaffirmed with NPAT expected between $90-$100 million
Strong Earnings Momentum
Credit Corp Group Limited has delivered a compelling first half for the 2025 fiscal year, reporting a 32% increase in underlying net profit after tax (NPAT) to $44.1 million. This performance underscores the company’s operational resilience and strategic positioning, particularly in its US collections and consumer lending segments.
The growth in NPAT was primarily fueled by a significant earnings uplift from consumer lending, which benefited from a strong starting loan book. Despite a slight decline in lending volumes compared to the prior year, the loan book expanded by 5% over the half to reach a record $465 million, signaling robust demand and effective portfolio management.
US Operations Show Resilience and Efficiency
Credit Corp’s US operations continue to improve, with collections rising 12% over the prior corresponding period despite a 24-month period of reduced investment and stable collection conditions. Notably, labour productivity surged by 28%, reflecting enhanced operational efficiency and the company’s ability to service a higher purchasing volume without expanding its workforce.
While no new purchasing pipeline additions occurred in the first half, Credit Corp anticipates deploying $150 million in the US over the full year. Stable pricing conditions are expected to create attractive opportunities to acquire credit card charge-offs that meet the company’s return criteria, positioning the US business for further growth.
Innovation and Product Development
Credit Corp is also advancing its product innovation pipeline. The Wallet Wizard fast cash loan product has been a key contributor to lending segment earnings, but the company is preparing to launch the Wizit digital credit card from a pilot phase late in FY2025. CEO Thomas Beregi highlighted Wizit’s potential to tap into a broader market by offering convenience and flexibility akin to a traditional credit card, addressing less immediate borrowing needs.
Additionally, the company has maintained restrictions on auto lending volumes due to elevated used car prices post-COVID. However, with used car prices now declining, these restrictions may soon be lifted, potentially unlocking further lending growth.
Stable Debt Buying Segment and Dividend Outlook
The Australian and New Zealand debt buying segment saw a 10% decline in NPAT, reflecting ongoing market challenges and subdued sale volumes. Nevertheless, the segment’s earnings have stabilized, and further significant declines are not anticipated.
Reflecting its strong financial position, Credit Corp declared an interim dividend of 32 cents per share, representing a payout of just under 50% of reported earnings per share for the half. This signals confidence in the company’s cash flow and earnings sustainability.
Guidance Reaffirmed Amid Positive Outlook
Credit Corp reaffirmed its FY2025 guidance, expecting net profit after tax in the range of $90 million to $100 million, supported by planned US investments of $200 million to $250 million and net lending volumes in the same range. Basic earnings per share guidance remains between 132 and 147 cents.
CEO Thomas Beregi emphasized that ongoing operational improvements will enable increased investment, underpinning the company’s growth trajectory. Investors will be watching closely how new product launches and US market dynamics unfold in the coming months.
Bottom Line?
Credit Corp’s strong H1 performance and strategic initiatives set the stage for a potentially record-breaking FY2025.
Questions in the middle?
- How will the Wizit digital credit card impact Credit Corp’s lending growth and profitability?
- What timing and scale of US debt purchases can investors expect in the second half?
- Will easing restrictions on auto lending translate into meaningful volume and earnings growth?
