Credit Corp FY profit slumps 78pct

Credit Corp shares are up 10 per cent after the debt collector announced a higher full-year profit than it estimated two weeks ago.

The company made $15.5 million in net profit after tax in the 12 months to June 30, down 78 per cent from last year and including the impact of a $64.1 million writedown to the value of its debt ledgers because of the impact of the novel coronavirus.

Still, the final result is higher than the unaudited estimate of between $10 million to $15 million in net profit after tax that Credit Corp outlined on July 13.

At 1105 AEST, Credit Corp shares were up 10.7 per cent to $18.68, their best level since June 11.

Not counting the impairment, Credit Corp made $79.6 million, up 13 per cent from last year.

Its revenue was down three per cent to $313.4 million.

The company said that in response to “heightened expectations of conduct” it had stopped charging interest on all debt purchase accounts and suspended legal, repossession and credit reporting activity.

Credit Corp has also taken steps to strengthen its balance sheet and is now debt free, with $400 million in cash and undrawn credit lines.

Credit Corp said it wouldn’t pay a final dividend but expects to resume dividend payments in 2021.

It said it expects to make between $60 million to $75 million in net profit after tax in FY2021.

“The Company is in a strong position with a formidable balance sheet, diversified purchasing relationships, appropriately adjusted pricing/risk settings and operations which have adapted to COVID-19 protocols,” the company said.

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