Credit Corp Group Limited · ASX:CCP
Credit — Investor Presentation (April 2018)
21 slides from Credit's investor presentation, Apr 18, 2018
Slide 1: FY18 Market Update
For personal use only FY18 Market Update 18 April 2018 Thomas Beregi, CEO Michael Eadie, CFO
Slide 2: Leadership in the credit impaired consumer segment
Leadership in the credit impaired consumer segment… For personal use only • Long-term growth ANALYTICS & OPERATIONAL SUSTAINABILITY • ROE 16% - 18% DISCIPLINE EXCELLENCE & COMPLIANCE • Low gearing Core Australian / NZ debt buying • Largest database • Highest asset turnover 1 • No adverse orders or •
Slide 3: Positioned for growth, returns and opportunity
…has positioned Credit Corp for growth, returns and opportunity • Discipline and diversification for profitable growth For personal use only - Reduced core business purchasing to preserve returns - Increased US purchasing to exploit favourable conditions - Continued loan book growth • Operational ex
Slide 4: Record of disciplined Purchased Debt Ledger (PDL) investment
Record of disciplined Purchased Debt Ledger (PDL) investment • Preparedness to cede market share but not returns For personal use only - Additional competitor capital has made some AUS / NZ market pricing unattractive - Record of varying purchasing in response to pricing • Increased component of US
Slide 5: US purchasing reflects favourable returns and opportunity
US purchasing reflects favourable returns and opportunity • Purchasing conditions remain favourable For personal use only - Strong credit growth - Record high revolving card balance 1 - Revolving card balance outstanding grew 6% in 2017 1 - Charge-off rates continue to increase, from 3.46% (Q1 2017)
Slide 6: US capacity scaling up to accommodate increased purchasing
US capacity scaling up to accommodate increased purchasing • New site in Salt Lake City secured near present site For personal use only - Allows for 400 seats - Move will occur during June • Headcount is currently 214 which represents near full capacity at the present site FY18 Market Update | 6
Slide 7: Continued loan book growth
Continued loan book growth • Strong second half to date For personal use only Consumer lending book and revenue +5% +3% $ 180m $ 172m $ 156m $ 161m $ 135m $ 121m $ 100m $ 84m Yield maintained $ 72m $ 63m Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Mar-18 Gross loan book (excl. provisions
Slide 8: Strong debt purchasing operational performance
Strong debt purchasing operational performance For personal use only Pricing accuracy and returns on track Efficiency • ) • Total cumulative collections above aggregate pricing • Productivity up by 10% over the pcp (YTD March) expectations • Total collections up 7% over the pcp (YTD March) • Core AU
Slide 9: US productivity and earnings on track
US productivity and earnings on track • Productivity maintained despite a near 20% increase in headcount in FY18 For personal use only • Significant investment in legal channel has grown legal collections and the litigation pipeline • US operation has been profitable for over 12 months US PDL collec
Slide 10: Unrivalled lending economics and consumer proposition
Unrivalled lending economics and consumer proposition… • Cheapest and most sustainable offering in the segment For personal use only Loan feature Credit Corp Typical cash loan Wallet Wizard loan competitor Price 1 $148 $440 Loan amount Up to $5k Up to $2k Duration Up to 3 years <12 months • On track
Slide 11: Strong customer acquisition and retention
…is translating to strong customer acquisition and retention For personal use only Customer settlements ($m) $ 60m $ 40m $ 20m - FY17 FY18 FY17 FY18 FY17 FY18 Q1 Q2 Q3 New customers Returning customers FY18 Market Update | 11
Slide 12: Debt purchasing differentiated on compliance
CCP debt purchasing is heavily differentiated on compliance,… • Impeccable compliance record For personal use only - No regulatory orders or undertakings despite being the largest and longest established operator - No reportable External Dispute Resolution (EDR) systemic issues • Superior EDR compla
Slide 13: Viewed favourably by external stakeholders
…is viewed favourably by external stakeholders… • Clear leader in recent survey conducted by Financial Counselling Australia 1 For personal use only Rating of debt collectors by financial counsellors in 2017 (score out of 10) Credit Corp Other debt buyers 1.0 2.0 3.0 4.0 5.0 6.0 7.0 1. Financial Cou
Slide 14: Approach also reflected in lending operations
…and this approach is also reflected in lending operations • Pricing below the general interest rate cap For personal use only • Not using any concessional caps - No Small Amount Credit Contracts (SACCs) - No Medium Amount Credit Contracts (MACCs) - No Consumer Leases • No ‘junk insurance’ • No ‘fle
Slide 15: FY18 Guidance confirmed
FY18 Guidance confirmed For personal use only Updated guidance Reconfirmed guidance Jan 2018 Apr 2018 PDL acquisitions $190 - $200m $190 - $200m Net lending $35 - $45m $35 - $45m NPAT $62 - $64m $62 - $64m AUS / NZ debt buying $45 - $46m $45 - $46m AUS / NZ lending $16m $16m US debt buying $1 - $2m
Slide 16: Questions
For personal use only Questions FY18 Market Update | 16
Slide 17: Appendix - Key operating metrics
For personal use only Appendix - Key operating metrics FY18 Market Update | 17
Slide 18: Operational metrics - pricing discipline and accuracy
Appendix 1 | Operational metrics - pricing discipline and accuracy For personal use only Cumulative collections $2.8bn $ 2,800m $2.4bn $ 2,400m Actual cash $2.0bn $ 2,000m collections $1.6bn $ 1,600m $1.2bn $ 1,200m Initial projections $0.8bn $ 800m $0.4bn $ 400m - * For all PDLs held at June 2008,
Slide 19: Operational metrics - collection life-cycle
Appendix 2 | Operational metrics - collection life-cycle For personal use only PDL collections by vintage +7% 1 $ 100m 30% 30% $ 80m 30% 32% 29% 33% 32% 31% 30% 32% 32% 28% 13% $ 60m 29% 31% 32% 14% 14% 11% 15% 12% 10% 15% 12% 17% 17% 15% 13% 21% 14% 15% 22% 23% 15% 19% 21% 25% $ 40m 16% 22% 19% 15%
Slide 20: Operational metrics - productivity
Appendix 3 | Operational metrics - productivity For personal use only Debt purchase productivity (direct collection staff only) PDL collections per hour YTD average $ 300 FY18: $223 FY17: $202 $ 250 2017/18 $ 200 2016/17 $ 150 $ 100 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY18 Market Update
Slide 21: Operational metrics - payers base
Appendix 4 | Operational metrics - payers base For personal use only Total portfolio Jun 16 Dec 16 Jun 17 Dec 17 Mar 18 Face value $5.3bn $5.7bn $5.8bn $5.9bn $6.0bn Number of accounts 673,000 699,000 716,000 710,000 710,000 Payment arrangements Face value $1,171m $1,235m $1,300m $1,300m $1,300m Num
Credit Corp Group — Investor Presentation (April 2018) on 6ix