The Credit Corp Group Limited (ASX: CCP) share price climbed 4% to a new record high after an FY20 update at its AGM this morning.
Why is the Credit Corp share price climbing higher?
Credit Corp CEO Thomas Beregi delivered an FY20 performance update at this morning’s company AGM, which has boosted the company’s share price.
Beregi reported that Credit Corp’s productivity is up by over 30% p.a. in the last 2 years with minimal regulatory complaints and no adverse undertakings.
Net profit after tax (NPAT) is trending upward, while return on equity (ROE) trended lower in FY19.
The Aussie lender is in a strong position following the recent Baycorp acquisition while demand for credit remains strong.
Credit Corp’s Australian and New Zealand operations are now both profitable with additional purchasing opportunities secured in New Zealand.
Lending growth is clear, with new customer settlements up 6% over the prior corresponding period (pcp) and total settlements up 14% on pcp. The real kicker is that this customer acquisition has been supported by really strong customer retention by Credit Corp.
The company maintained its updated August 2019 guidance with NPAT on track for 15–18% growth in FY20. NPAT is expected to hit $81–83 million, while net lending should total $60–65 million.
How about Credit Corp’s share price performance?
The Baycorp acquisition saw the Credit Corp share price surge higher in mid-August as the earnings boost was built into analysts’ estimates.
This morning’s AGM update saw Credit Corp shares surge to a new record-high of $33.11 before tempering to their current $32.40 level. Credit Corp shares have been surging higher since January (+74.35% YTD) and have more than tripled in the last 5 years.
At the height of the GFC, Credit Corp shares traded for under $0.50 and have rebounded 7,000% since the end of 2008.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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