Margin Expansion and Funding Strength Bolster Latitude’s Growth Outlook

Strong Growth Momentum

Latitude Group Holdings Limited (ASX – LFS) has delivered a compelling set of financial results for the half year ended 30 June 2025, showcasing sustained momentum across its core consumer finance business. The company achieved record new loan originations of $783 million, a 15% increase year-on-year, driving total receivables to a new high of $7.0 billion. This growth was supported by strong demand for personal and auto loans, as well as expanding credit card purchase volumes.

Latitude’s net interest margin (NIM) expanded significantly to 11.7%, up 142 basis points compared to the prior corresponding period. This margin expansion reflects the company’s effective pricing strategies and a favourable funding environment, with cash rate cuts in Australia and New Zealand contributing to lower funding costs.

Operational Efficiency and Funding Strength

Operationally, Latitude demonstrated disciplined cost management, with cash operating expenses increasing only 3% year-on-year despite higher volumes and strategic investments. The company’s cash cost-to-income ratio improved by approximately 700 basis points, underscoring enhanced operating leverage. This efficiency has enabled Latitude to reinvest more than $10 million into growth initiatives including digitalisation, artificial intelligence, and cyber security enhancements.

On the funding front, Latitude raised $1.5 billion through a mix of public asset-backed securities (ABS) transactions and warehouse refinancings. The company successfully extended its debt maturity profile and diversified its investor base, with 63% of investors domiciled offshore. These moves have strengthened the balance sheet and supported margin expansion through improved cost of funds.

Credit Quality and Market Position

Latitude’s credit performance remains robust, with delinquency rates and net charge-offs tracking in line with historical norms despite a recalibration of charge-off methodologies. The company’s risk-adjusted income increased 8.2% year-on-year, reflecting prudent risk management and portfolio optimisation.

Latitude continues to solidify its position as Australia’s leading non-bank unsecured consumer lender, boasting the #2 brand in personal loans and expanding its credit card market share by 82 basis points year-on-year. The company’s extensive retail partnerships and broker networks underpin its broad customer reach and diversified product offerings.

Positive Outlook Amid Macroeconomic Tailwinds

Management remains optimistic about the second half of 2025, anticipating further benefits from easing central bank cash rates, stable labour markets, and normalised household savings. These factors are expected to support continued asset growth, margin expansion, and predictable credit outcomes. Latitude plans to maintain its strategic investment focus on new products, customer experience, and technology capabilities to drive long-term profitable growth.

Overall, Latitude’s half-year results reflect a well-executed strategy balancing growth, efficiency, and risk, positioning the company to capitalize on evolving market opportunities while delivering value to shareholders.