The share price of S&P/ASX 200 Index (ASX: XJO) consumer debt business Credit Corp Group Limited (ASX: CCP) plummeted this morning after the company revealed a major profit hit.
The Credit Corp share price fell 2.6% on open to $21.09 before plunging further to its intraday low of $19.64 – marking a 10.2% dive.
Interestingly, it has since bounced back to trade at $21.75 at the time of writing, 0.51% higher than its previous close.
ASX 200 financials share wobbles as profits fall 30%
Here are the key takeaways from Credit Corp's earnings for the first half:
- Post-tax profits tumbled 30% on the prior comparable period (pcp) to $31.8 million
- Revenue lifted 8% to $220.5 million
- Earnings per share (EPS) fell 31% to 46.9 cents
- Customer loan book grew 32% to $331 million
- Dividend slashed by 40% to 23 cents per share
While a lot of its first-half earnings look dire, the company's consumer lending segment remains on track to post record full-year earnings.
Its profits tumbled due to up-front loss provisioning and marketing expense from rapid loan book growth; costs from increased United States resourcing; and run-off in the core Australia/New Zealand debt buying segment.
What else happened last half?
The first half was a period of growth for the ASX 200 company.
Its loan book growth was born from its Wallet Wizard unsecured cash loan product. Strong demand brought a record $201 million of lending last half while the company maintained credit standards and rationed the volume of longer-duration auto loans.
What did management say?
CEO of Credit Corp Thomas Beregi commented on the news driving the ASX 200 company's share price today, saying:
Wallet Wizard credit settings remain conservative and short durations coupled with relatively small loan sizes will contain risk should economic conditions deteriorate.
US charge-off volumes are growing and increased resourcing will enable Credit Corp to service recent and future purchases, growing collections and earnings over the medium term.
What's next?
The remainder of financial year 2023 looks like it could be better for Credit Corp. The company expects an earnings recovery in the second half, mainly due to its consumer lending segment.
Its full-year profit is tipped to come in between $90 million and $97 million while EPS is forecast to end up between $1.33 and $1.43.
It's also bolstered its purchased debt ledger acquisition guidance to between $290 million and $295 million and its net lending volumes guidance to between $140 million and $150 million.
Credit Corp share price outperforms ASX 200 in 2023
Today's tumble included, the Credit Corp share price has posted a notable 14% gain so far this year. That's compared to the ASX 200's 8% rise.
Looking further back, however, the stock has fallen 40% over the last 12 months while the index has lifted 7%.
