Latitude Group Holdings Limited reported a robust 59% increase in Cash NPAT for FY25, driven by strong volume growth and margin expansion, while declaring a fully franked 9.00 cents per share dividend.
- Cash NPAT from continuing operations up 59% to $105.1 million
- Receivables reach five-year high of $7.2 billion, up 7% year-on-year
- Operating income margin expands by 78 basis points year-on-year
- Net charge offs rise but remain within historical ranges
- Strong funding initiatives raise $1.5 billion and improve liquidity
Robust Profit Growth Amidst Volume and Margin Expansion
Latitude Group Holdings Limited has delivered a standout financial performance for the full year ended 31 December 2025, with Cash NPAT from continuing operations soaring 59% year-on-year to $105.1 million. The company’s statutory profit after tax also surged 208% to $94.4 million, underscoring the strength of its core business operations.
This growth was underpinned by a 10% increase in total volume and a 7% rise in receivables, which reached a five-year peak of $7.2 billion. The company’s disciplined pricing strategy and lower funding costs contributed to a 78 basis point expansion in the operating income margin, reflecting improved profitability across its lending portfolios.
Performance Drivers: Pay and Money Divisions
Latitude’s twin engines; the Pay and Money divisions; both contributed to the strong results. The Pay division saw credit card purchase volumes climb 13% year-on-year, bolstered by the full-year impact of the David Jones card acquisition and the relaunch of the Low Rate MasterCard. Meanwhile, the Money division achieved record new origination volumes, particularly in personal loans across Australia and New Zealand, with origination up 14% year-on-year.
These volume gains were complemented by margin improvements, with net interest margin expanding by 104 basis points year-on-year. The Reserve Bank of Australia’s and Reserve Bank of New Zealand’s easing monetary policies helped reduce funding costs, further supporting margin growth.
Credit Quality and Cost Management
While net charge offs increased 24% year-on-year to $266.3 million, the rate of 3.85% remains within pre-Covid historical ranges, reflecting a normalization of delinquencies aligned with broader macroeconomic conditions. Provision coverage also increased slightly to 4.45%, indicating prudent risk management.
Latitude’s focus on operational efficiency is evident in a 9% reduction in cash operating expenses year-on-year and a significant improvement in the cash cost-to-income ratio, which fell by approximately 900 basis points to 41.2%. This cost discipline has enabled the company to invest strategically in technology, marketing, and innovation to enhance customer experience and support future growth.
Strong Balance Sheet and Funding Initiatives
The company’s balance sheet remains robust, with a tangible equity ratio steady at 7.1%, comfortably within target ranges. Latitude successfully raised $1.5 billion through public asset-backed securities transactions and restructured $1.5 billion in private warehouse facilities, enhancing liquidity and extending debt maturities. These funding efforts provide over $1 billion in committed headroom to support ongoing receivables growth.
Reflecting confidence in the company’s financial position and outlook, the Board declared a fully franked final dividend of 5.00 cents per share, bringing the total dividend for FY25 to 9.00 cents per share. This represents an 89% payout ratio relative to Cash NPAT, signaling a shareholder-friendly approach while maintaining capital flexibility.
Looking Ahead
Latitude’s FY25 results highlight the effectiveness of its disciplined margin management, cost control, and strategic investments across its core divisions. As the company navigates evolving economic conditions, its strong funding position and operational momentum position it well for continued growth and shareholder returns.
Bottom Line?
Latitude’s strong FY25 performance sets a solid foundation, but investors will watch closely for credit trends and margin sustainability in 2026.
Questions in the middle?
- How will Latitude manage rising net charge offs amid changing macroeconomic conditions?
- What impact will ongoing investments in technology and marketing have on future growth?
- Can the company sustain its expanded operating income margin as competition intensifies?