Latitude Group Holdings Ltd. · ASX:LFS
Latitude — Investor Presentation (February 2025)
41 slides from Latitude's investor presentation, Feb 21, 2025
Slide 1: FY24 Results Presentation
FY24 Results Presentation For the full year ended 31 December 2024 LATITUDE GROUP HOLDINGS LIMITED ABN 83 604 757 391
Slide 2: Important Notice & Disclaimers
Important Notice & Disclaimers Important notice and disclaimer The following important notice and disclaimer applies to this presentation (“Presentation”) and you are therefore advised to read this carefully before reading or making any other use of this Presentation or any information contained in
Slide 3: Important Notice & Disclaimers
Important Notice & Disclaimers Information and liability To the maximum extent permitted by law, LFS and related bodies corporate and each of their respective directors, officers, employees, partners, agents, and management (together, the “Beneficiaries”) exclude and expressly disclaim: • all duty a
Slide 4: Agenda
Agenda 1 2024 Highlights 2 Full Year Financial Performance 3 Management Outlook
Slide 5: 2024 Highlights
2024 Highlights Bob Belan – Managing Director & CEO
Slide 6: Full Year 2024 Snapshot – Key Business Drivers
Full Year 2024 Snapshot – Key Business Drivers Key growth driver momentum built steadily through the year, delivering a strong 2024 result New Customer New Personal & Auto Total Transaction Total Purchase Accounts Opened Loan Origination Volume (#) Volume ($) $3.0b Money Division 265k $1.5b 53m $6.7
Slide 7: Full Year 2024 Snapshot – Key Financial Metrics
Full Year 2024 Snapshot – Key Financial Metrics 2024’s focus on fundamentals has established the base for sustainable financial performance uplift $4.3b Interest Net Interest Total Operating Risk Adjusted Income Income Income Income New Funding Raised or Refinanced $1.1b $678m $729m $515m 4 ABS deal
Slide 8: Our Strategy & Our Leaders
Latitude Our Strategy & Our Leaders Executive Team Company priorities & resource allocation guided by a clear and focused Corporate Strategy and led by a globally experienced executive team Path to Full Potential Strategy SIMPLIFY – OPTIMISE – MAXIMISE Bob Belan MD & CEO Stefano Tognon Interim CFO -
Slide 9: Money: Record high receivables at improved margins
Money: Record high receivables at improved margins 1 Brilliant Basics (Revenue Management) Record high new origination Rising portfolio yield supporting Receivables reach new high volume achieved in 2024 1 NIM growth momentum watermark of $3bn +2.6% HoH / +24% YoY and #2 brand in Roll-off of older,
Slide 10: Pay: Focus on fundamentals delivering volume growth
Pay: Focus on fundamentals delivering volume growth 1 Brilliant Basics (Revenue Management) Credit demand is normalising & LFS Card usage & purchase volume Delivering growth in purchase value proposition is resonating is accelerating volumes and receivables Applications +22% YoY and now back Higher
Slide 11: OpEx model re-engineering now embedded and enabling additional investment in growth
OpEx model re-engineering now embedded and enabling additional investment in growth 2 Brilliant Basics (Operating Leverage) Disciplined cost management despite Expense base re-engineering unlocking capacity persistent inflationary pressure for incremental strategic & growth investments Cash OpEx Cos
Slide 12: A restructured funding programme in 2024 to support operating margin and balance sheet expansion
A restructured funding programme in 2024 to support operating margin and balance sheet expansion 3 Optimised Balance Sheet Foundational work completed in 2024 to enable balance sheet growth and optimise CoF in 2025+ ABS funding success & cost optimisation delivered Raised or refinanced $4.3bn of sec
Slide 13: Advancing our Winning Culture agenda
Advancing our Winning Culture agenda 5 Winning Culture Steady advancement across Latitude’s refreshed Purpose & Values people & culture objectives Leadership appointments largely complete and new operating model embedded Include graphics on new Ongoing investment in Purpose and Value employee value
Slide 14: Financial Performance
Financial Performance Stefano Tognon – Interim CFO
Slide 15: Full Year & 2H24 Financial Snapshot
Full Year & 2H24 Financial Snapshot Strong performance turnaround in 2024 driven by step-change in business fundamentals Growing volumes & Margins expanding with Improving OpEx efficiency EPS momentum restored & receivables robust credit quality while investing in growth dividend returns New Loan Or
Slide 16: Strong topline performance
Strong topline performance Solid momentum in volume continues, enabling receivables to hit highest balance since post-Covid Volume growth continues +16% YoY, +16% HoH ($m) Delivering receivables growth 475 4 4,418 ($m) 121 22 3,795 6.7 6.5 6.5 6.5 2H23 Money AU Money NZ Pay AU Pay NZ 2H24 6.4 6.3 1H
Slide 17: Operating Income growing on margin expansion
Operating Income growing on margin expansion Considered pricing actions, AGR growth and funding management delivered margin expansion Operating Income yield up 81bps HoH, up 128bps YoY Key YoY drivers 0.85% 0.00% 11.74% (0.03%) 10.93% Pricing actions implemented through FY23 & FY24 continue to drive
Slide 18: Operating income margin evolution
Operating income margin evolution Asset pricing actions driving lift in revenue margins, while funding costs have stabilised Income yield vs. CoF yield (HoH) Strategic/competitive repricing initiatives actioned across PL/Auto and Re-pricing strategies continuing 135bps GO/Gem APR’s ↓ to deliver upli
Slide 19: Credit discipline maintained
Credit discipline maintained Delinquency and losses returning to long term averages, underpinned by steady unemployment Quality of new customer originations remains strong Delinquency rates normalising to pre-Covid long term averages Money A&NZ Pre-Covid COVID stimulus Cyber peak Money charge off me
Slide 20: Credit losses profile
Credit losses profile Charge offs normalising to long term averages and prudent provisioning maintained Net Charge Off Rates Provision Coverage Rates 5.50% 3.83% 4.62% 4.46% 3.37% 3.28% 3.31% 3.54% 3.52% 4.24% 4.21% 4.28% 4.21% 4.21% 4.23% 4.29% 3.15% 3.74% 3.75% 2.66% 2.54% 2.37% 2.32% 2.12% 1H19 2
Slide 21: Risk adjusted returns expanded by 94bps in year…
Risk adjusted returns expanded by 94bps in year… … despite cash rates remaining elevated RAI yield up 94bps YoY to 8.0% Interest Rate Sensitivity • Revenue yield ↑ through 138bps considered pricing actions across FY23 and FY24 Interest Expense benefit1 9bps 8.0% (53)bps • Both revenue yield and net
Slide 22: Supporting future growth via deliberate deployment of operating capital in technology and growth investments
Supporting future growth via deliberate deployment of operating capital in technology and growth investments Cash OpEx excl one-off +9% HoH 195 12 Key Drivers HoH 4 0 3 4 1 178 • Employee costs due to full benefit of 13 Investment in: FY23 operating model restructure • Digitalisation • Cyber secur
Slide 23: Notable Items in 2H24
Notable Items in 2H24 Significant reductions in notables, HoH $8m and YoY $19m Cash NPAT $38.5m Notable Items in 2H24, $19m pre-tax ($17m post-tax) Pre tax $ millions: Amort of Intangibles $16.2m Amortisation of acquisition intangibles. Nov’24 end date, no further costs in FY25 Incentive rebate re
Slide 24: Continued strength in funding programme
Continued strength in funding programme $4.3 billion secured funding raised or refinanced in 2024 Cost 50+ 58% Investors Diverse Funding Platform Effective Investors Offshore to A&NZ Prudent capital management • 8 transactions completed in 2024: approach • 4 public ABS deals worth $1.6bn Warehouse •
Slide 25: Outlook
Outlook Bob Belan – Managing Director & CEO
Slide 26: Outlook
Outlook With the prospect of more favourable macro-economic settings in 2025, alongside the work undertaken to create a more agile and focused business, we are confident of continued and sustained profit growth. We expect the interest rate easing cycle to continue in 2025 which should further suppor
Slide 27: Company Overview
Company Overview
Slide 28: Latitude is the largest non-bank unsecured consumer lender in Australia & New Zealand
Latitude is the largest non-bank unsecured consumer lender in Australia & New Zealand Range of White label Latitude is Separation from GE Establishment of Launch of Path to Full Hallmark & Launch David IPO & Shinsei Acquisitions of AGC founded acquisitions capabilities acquired from as a standalone
Slide 29: Unparalleled scale, reach & expertise distinguish LFS franchise across consumer lending landscape
Unparalleled scale, reach & expertise distinguish LFS franchise across consumer lending landscape AU Personal loans and cards portfolio ranking1 $bn SCALE 14.0 Big 4 Bank $6.7bn total customer balances2 Non-Bank Lenders $6.7bn in total purchases on cards annually2 Regional/Mid-sized Bank 12.0 Mutual
Slide 30: Simplified and efficient “twin-engine” revenue model…
Simplified and efficient “twin-engine” revenue model… Products EMERGING Exited: Insurance (in May 2023) BNPL A&NZ (in 2H23) CREDIT SEGMENTS Canada (in Dec 2023) (e.g., solar & batteries) PERSONAL Asia (in Apr’24) CARDS LOANS SALES MOTOR FINANCE LOANS PAY X-SELL CROSS-SELL MONEY > > Maximisin
Slide 31: … meets the needs of consumers and merchant-partners
… meets the needs of consumers and merchant-partners Engaged CUSTOMERS looking for great experiences… Long-standing MERCHANTS looking to optimise sales & reach… Multi-sector & Trans-Tasman Cross-generational & diverse • Over 30 business segments represented • 64% Millennials & Gen X and 29% Boom
Slide 32: A snapshot of our customers
A snapshot of our customers Diverse range of customers across generations 60% of customer relationships are 5+ years Latitude Customer Base New Originations 1% 2H24 18% 11% 7% 5% 14% 23% 19% 17% 12% 60% 25% 10% 23% 23% 32% 18-27 28-37 38-47 48-57 58-67 68+ <+1 year 1-3 years 3-5 years 5+ years 85% o
Slide 33: Appendices
Appendices
Slide 34: ESG Full-Year 2024 highlights
ESG Full-Year 2024 highlights Latitude continues to lead participation in $1m+ donated to charity partners via Financial Counselling Australia voluntary workplace giving since August 2017 industry funding scheme. Supporting vulnerable customers 630+ hours spent by Latitude employees through approval
Slide 35: Funding: cash rate scenario sensitivity
Funding: cash rate scenario sensitivity Strong potential for margin expansion as rates reduce with 100bps change = $40m pre-tax benefit Funding rates appear to have peaked and have already started to reduce in New Zealand Sensitivity Summary and Outlook 6.0% AU Cash Rate 6.0% NZ Cash Rate • 100bps r
Slide 36: Macro environment conditions impacting prior years have began to turn, playing to Latitude’s advantage
Macro environment conditions impacting prior years have began to turn, playing to Latitude’s advantage Household Savings below pre-COVID levels … Retail Sales (YoY) showing modest growth … 25.0% 25.0 20.0% 20.0 • Accumulation of 15.0% household savings 10.0% 15.0 • Modest growth during COVID 5.0% st
Slide 37: Results Summary
Results Summary 2H24 1H24 2H23 HoH YoY FY24 FY23 YoY Volume ($m) 4,418 3,805 3,795 16% 16% 8,223 7,255 13% Gross receivables ($m) 6,748 6,378 6,232 6% 8% 6,748 6,232 8% AGR ($m) 6,565 6,287 6,146 4% 7% 6,430 6,273 2% Cash PBT ($m) 89 67 39 33% 129% 155 98 59% Cash NPAT ($m) 38 27 16 40% 137% 66 28 1
Slide 38: Summary profit & loss statement
Summary profit & loss statement ($m) 31-Dec-24 30-Jun-24 31-Dec-23 HoH YoY FY FY24 FY23 2H24 1H24 2H23 Change % Change % Change % Interest income 559.7 503.8 481.8 11% 16% 1,063.5 957.1 11% Interest expense (198.2) (187.8) (178.2) (6%) (11%) (386.0) (342.7) (13%) Net interest income 361.5 316.0 303.
Slide 39: Cash NPAT to Statutory NPAT FY24
Cash NPAT to Statutory NPAT FY24 Amortisation of FY24 Corporate Restructuring Remediations Asset Decommissioned Cash NPAT acquisition Stat NPAT ($'m) development costs (incl cyber) impairment facilities intangibles Net interest income 677.5 - - - - - (0.1) 677.4 Other income 51.7 - - - - - - 51.7 To
Slide 40: Delinquency performance over time
Delinquency performance over time Delinquencies (30+ days past due) by product, Australia Delinquencies (30+ days past due) by product, New Zealand Shift from Shift from 9% 9% 120 to 180 days 120 to 180 days 8% Mar’23 8% cyber incident Mar’23 7% 7% cyber incident 6% 6% 5% 5% 4% 4% 3% 3% 2% 2% 1% 1%
Slide 41: Thank you
Thank you
Latitude Group Holdings — Investor Presentation (February 2025) on 6ix