Today the financial services firm Credit Corp Group [ASX:CCP] revealed a plummeting of net profit by 30% for the first half of 2023.
The company explained this was due to provisioning and US resourcing costs necessary for gains in the second half, protecting its guidance.
Shareholders for CCP took the share price down more than 5% hours after the announcement.
For the first month of 2023, CCP’s share price has risen by 9% — although, throughout the course of 2022, it has dropped by 41%.
Source: marketindex.com
Credit Corp reveals profit loss for H2FY23
Credit Corp has shared a disappointing start to FY23, with its net profit plummeting 30% to $32 million in the first half.
While the lower profit was said to be the result of provisioning and US resourcing expenses, the company did add that it expects a strong recovery for the second half of the fiscal year.
In fact, the financial company has left its net profit after tax guidance unchanged, certain that it is still on track for a solid FY2023 result.
These were the key elements highlighted in the company’s announcement this morning:
- ‘32% growth in the consumer loan book to $331 million
- On track for record full year consumer lending segment earnings
- Continued recovery in charge-off volumes producing strong US investment
- Significant step-up in US resourcing to meet the opportunity’
Part of the expense taken from the group’s profit for the first half was due to a rapid account of loan book growth (such as the company’s new Wallet Wizard unsecured cash loan product), and a run-off in core Australia and New Zealand debt buying segments.
The group predicts loan book growth to moderate over the second half, with record starting books hoping to boost interest revenue.
CCP also noted an expectation for US collections to improve with resourcing turning to collections. High project costs that appeared in the first half were described as non-repeating instances, which the company believes will translate to benefits in the latter half of the year.
Thomas Beregi, CEO of Credit Corp, stated that Wallet Wizard credit settings are expected to remain conservative, particularly with short and relatively small loan sizes proving risky if economic conditions deteriorate.
Credit Corp’s unchanged outlook
CCP says its EPS guidance is to remain at $1.33–1.43. The company also upgraded its acquisition forecasts from the $240–260 million planned in October last year, which is now improved to $290 million.
Net lending volumes also improved, reaching a range of $140–150 million. The initial guidance range was set at $50–60 million.
All in all, the group’s CEO Mr Beregi looks forward to the improved outlook, which has ultimately come off the harder period in the first half, H1 FY23 shouldering the brunt of expenses and resource set-up.
Beregi noted that ‘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.’
Bargain stocks — take five
2022 was a challenging year. And though so far in 2023 markets have been rallying in hopes of change, things aren’t looking much better…yet.
With some effects of the pandemic still lingering, we were handed an influx of new challenges — inflation, the war, continually rising rates…
The hard yards aren’t quite over yet, which is why everyone is looking to save a pretty penny where they can.
And it’s in times like these that some real ASX stock bargains can emerge — if you know where to look.
Our small caps expert Callum Newman has done the hard work for you.
He’s found five of what he calls ‘the best stocks to own in Australia’ right now.
And the best part is, right now, they don’t even cost that much.
Click here to discover Callum’s top five Aussie bargain stocks.
Regards,
Mahlia Stewart,
For Money Morning
