Latitude Group Holdings Ltd. · ASX:LFS
Latitude — Investor Presentation (August 2024)
41 slides from Latitude's investor presentation, Aug 23, 2024
Slide 1: Results Presentation & Discussion Materials
[{ LATITUDE Results Presentation & Discussion Materials For the half year ended 30 June 2024
Slide 2: Important Notice & Disclaimers
Important Notice & Disclaimers ci 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
Slide 3: Important Notice & Disclaimers
Important Notice & Disclaimers ci Information and liability To the maximum extent permitted by law, LFS and its respective affiliates and related bodies corporate and each of their respective directors, officers, partners, employees, agents and advisers (together, the ‘Beneficiaries’) exclude and ex
Slide 4: Agenda
Agenda ] First Half 2024 Highlights 2 Financial Performance 3 Management Outlook
Slide 5: First Half 2024 Highlights
First Half 2024 Highlights Bob Belan - Managing Director & CEO
Slide 6: 1st Half 2024 Snapshot — Key Business Drivers
1st Half 2024 Snapshot — Key Business Drivers c: Strong rebound in all key leading growth drivers New Latitude Volume Volume Volume [ Customers Acquired |/ Personal & Auto Loans |[ Interest Free Plans |{__ Card Spend ~] #2 Australian Personal Loans 128k $1.0b $584m $2.4b Segment Share! HoH. YoY HoH
Slide 7: 1st Half 2024 Snapshot — Key Financials
Ist Half 2024 Snapshot — Key Financials c: Execution discipline and focus on fundamentals driving performance turnaround _ Interest oe Net Interest _____ Total Operating — Risk Adjusted 1 ‘| onne Income Income Income Income $ ef billion mye | $504m | $316m | $342m | $232 Raised & Refinanced m m m m
Slide 8: Latitude Executive Team
Latitude Executive Team 1 2 3 4 5 8
Slide 9: Money Division: Record high new origination volume
Money Division: Record high new origination volume and _ L: at elevated margins Ci) Brilliant Basics (Revenue Management) Over $1bn in Total Loan Originations New loans continue tobe written Portfolio yield supporting profit in 1H24 growth momentum at stronger margins +25% HoH / +60% YoY and now #2
Slide 10: Pay Division: Focus on the fundamentals with customers & merchants
Pay Division: Focus on the fundamentals with customers L: & merchants Ci) Brilliant Basics (Revenue Management) Consumer demand building & value _ proposition resonating Applications +34% YoY and now back to Ist half 2021 levels Sales Finance & Credit Cards Applications (#, 000s) New marquee partner
Slide 11: Cost re-engineering implemented to support incremental investments
Cost re-engineering implemented to support incremental L: investments (2) Brilliant Basics (Operating Leverage) Disciplined cost management despite consistent __ Expense base re-engineering unlocking inflationary pressure incremental strategic & growth investments Total Cash Opex Employee Costs? FTE
Slide 12: 1st half 2024 Treasury Highlights
1st half 2024 Treasury Highlights [3] Optimised Balance Sheet Raised $1.1bn of new funding in public ABS v Re-established programmatic issuance record post Cyber v_ Secured best-in-class pricing and advance rates for each deal v_ Extended maturity profile, issuing at 3 years term Expanded to 56 acti
Slide 13: Progressing our simplification & cultural change agendas
Progressing our simplification & cultural change agendas L: a Portfolio Rationalisation an FY23 . . e E Exit unprofitable BNPL segment Operational decommissioning complete OpEx redeployed to “core” products oe Sold Hallmark Insurance business wy Transaction completed May’'23 TSA completed Jun’24 Cap
Slide 14: Financial Performance
Financial Performance Paul Varro —- CFO
Slide 15: 1st Half 2024 Financial Snapshot
1st Half 2024 Financial Snapshot Bounce-back well underway Strong earnings Growing volumes & momentum Receivables mPayA&NZ mm Money A&NZ 4,004 4,095 1018 10.9% wees 3,077 2H23 1H24 1H23 1H24 Gross Loan Receivables ($m) ! 1H23 2H23 1H24. tot 1H23 223 1H24 ; 9 mPayA&NZ m™ Money A&NZ —— 6219 6,232 6,37
Slide 16: Strong topline performance
Strong topline performance Solid momentum in volume, receivables rebuild well progressed Receivables ($bn) MoneyAU MoneyNZ — PayAU Pay NZ 1H24 194 v (81) (33) 4,095 Repayments down seasonally, up v 1H23 on stronger card spend activity Repayment Rate (ex CC BNPL} 1H24 rate still significantly COVID p
Slide 17: Operating Income growing on margin expansion
Operating Income growing on margin expansion Considered pricing actions delivering margin expansion despite rising funding costs 056% 0.16% 10.93% iz {| — 10.46% (0.26%) HoH Key Drivers 2H23 Interest Interest Other Op 1H24 H24v Income Expense Income Pricing actions implemented through FY23 | 1H23 10
Slide 18: Operating income margin evolution
Operating income margin evolution Pricing actions outpacing funding costs Strategic/competitive repricing Re-pricing strategies paused initiatives actioned across PL/Auto and ————, -— in 1H23 from Cyber, — i H _ GOIGem APR's 4 ' recommenced in 2H23 poets Income yield vs Cof yield- Cof growth ____ H
Slide 19: Funding: cash rate scenario sensitivity
Funding: cash rate scenario sensitivity Strong potential for margin expansion as rate reduce with 100bps change = $40m pre-tax benefit () Sensitivity Summary and Outlook rs 100bps rates = ~$40m interest expense (pre-tax) benefit. AU = ~$32m / NZ = ~$8m + RBNZ J25bps at Aug’24 = ~$2m full year pre-ta
Slide 20: 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 ----------------5 Money A&NZ Pre-Covid COVID stimulus Cyber peak P
Slide 21: Credit losses
Credit losses Charge offs normalising to long term averages. Prudent provisioning remains processes Net Charge Off Rates none poosecece Provision Coverage Rates noone 5.50%I 4.62% Sf 4.24% 4.21% 4.46% 4 2804) 4.22% 4.21% 3.83% 13.74% 3.75%! 3.37%I 3.28% : 2.66% B 2.54%] 9 9 2.12% (237% 2-32% THQ 2HI
Slide 22: Cost control and expense base re-engineering
Cost control and expense base re-engineering c: Reductions in FTE & one-off incentive adjustments offsetting investments in growth & inflation Total Opex down 4% YoY (ex 1-off up 2.6%) 192 184 Key Drivers YoY + Employee costs V due to FY23 operating model restructure savings & lower employee incenti
Slide 23: Notable Items in 1H24
Notable Items in 1H24 Significant reductions in notables, HOH V$12m and YoY V$122m Cash NPAT fn Notable Items in 1H24, $26m pre-tax ($18m post-tax) © -=--------2-ee oy TN eye HTN Ee Tve lls) ylekety |) §~=Amortisation of acquisition intangibles (Nov'24 end date). Corp Dev $7.4m David Jones back book
Slide 24: Funding Platform & Approach
Funding Platform & Approach Re-invigorated funding programme with 3 term transactions totaling $1.1bn . H | Cost ; 52% Investors Q Diverse Funding Platform | etrective | investors | Offshore to A&NZ Prudent capital management + 4transactions completed in 1H24: ‘ approach H ; ; Warehouse * 3 public t
Slide 25: Outlook
Outlook Bob Belan - Managing Director & CEO
Slide 26: Outlook
Outlook With the emergence of more favourable macro-economic settings for Latitude’s business model, we expect that elevated consumer demand for our products will drive sustained volume and receivables growth. We also anticipate growth to be further supported by management's focus on new partnership
Slide 27: Company Overview
Company Overview
Slide 28: Sales Finance Credit Cards Personal Loans
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 standalone Latitude Potential Canada sale. Exit Jones co-label investment Symple & Oct
Slide 29: #1 non-bank
$bn SCALE 14.0 Big 4 Bank Non-Bank Lenders Regional/Mid-sized Bank 12.0 Mutual/Credit Union 10.0 #1 non-bank REACH unsecured consumer lender in A&NZ 8.0 6.0 EXPERTISE 4.0 2.0 0.0
Slide 30: PAY MONEY
❖ ❖ ❖ ❖ PAY X-SELL MONEY > > $3.5b $2.9b receivables receivables PAY and MONEY are built to maximise customer lifetime value via cross-sell and optimisation of average acquisition cost
Slide 31: A clear use case for our products… with room to grow
➢ ➢ • • • • ➢ ➢ • • ➢ ➢ • • • • • • • • A clear use • case for our • • products… with • room to grow • in new verticals •
Slide 32: Our customers
Our customers yoosacacoe Diverse range of customers across generations = --------; poosncnsa nan 67% of customer relationships are 5+ years = -----------5 Latitude Customer Base New Originations 1H24 Pa m<+lyear m13years =3-Syears m5+ years 218-27 = 28-37 =38-47 = 48-57 =58-67 "68+ posse 85% of cust
Slide 33: Appendices
Appendices List of Appendices:
Slide 34: ESG 1st Half 2024 highlights
ESG Ist Half 2024 highlights 6) $1m+ donated to charity partners via Aa workplace giving since August 2017 €S3 250+ hours spent by Latitude employees yy volunteering with charity partners Inaugural Reconciliation Action Plan drafted and being prepared for Q3 lodgement. Fe Go-live of new online platf
Slide 35: … to support elevated lending demand
• • … to support elevated lending demand … to support volume growth ↓ Peak: 123% • 1H24 • • 1H23 Pre-Covid LT Avg: 92% 96% 94% • … to support receivables growth … to support revenue margins
Slide 36: 1H24 Results Summary
1H24 Results Summary ee ae eee Volume ($m) 4,095 4,004 3,595 AGR ($m) 6,287 6,146 6,392 2% Gross receivables ($m) 6,378 6,232 6,219 Cash PBT ($m) 67 39 59 Cash NPAT ($m) 27 16 11 Statutory NPAT ($m) 9 (10) (92) Cash EPS (cents) 2.63 1.56 1.10 Dividend per share (cents) 0.00 0.00 0.00 RAI (%) 74% 6.9
Slide 37: Summary profit & loss statement
Summary profit & loss statement Interest income 5038 4818 4753 5% 6% Interest expense (187.8) (178.2) (164.7) (5%) 14%) Net interest income 316.0 3036 3106 4% 2% Other income 258 20.7 232 25% 11% Total operating income. 3418 3243 3338 5% 2% Net charge offs (0.0) (109.6) (104.9) 0% (5%) Risk adjusted
Slide 38: Cash NPAT to Statutory NPAT 1H24 (cont. ops)
Cash NPAT to Statutory NPAT 1H24 (cont. ops)... f aay Cash NPAT Stat NPAT Net interest income 316.0 316.0 Other income 25.8 - - - - - - 25.8 Total operating Income 341.8 - - - - - - 341.8 Net charge offs (110.0) - - - - - - (110.0) Risk adjusted income 231.8 - - - - - - 231.8 Cash operating expenses
Slide 39: Cash NPAT to Stat NPAT 1H23 & 2H23 restated (cont. ops)
Cash NPAT to Stat NPAT 1H23 & 2H23 restated (cont. ops) Net interest income 3106 3102 Other income 232 - - : : : 04 236 Total operating Income 333.8 (0.3) : : : - 03 333.8, Net charge offs (104.9) - - - - - - (104.9) Risk adjusted income 2289 (03) - - - - 03 2289 Cash operating expenses (169.9) : (2
Slide 40: Delinquency performance over time
Delinquency performance over time 1% 0% - Delinquencies (30+ days past due) by product, Australia -----; -- Delinquencies (30+ days past due) by product, New Zealand -- er incident : . Cyber incident mt : wa U [sa - 2% : 1% : 0% - 2008 2009 2010 201 2012 2013 2014 2015 2016 2017 OIE 2019 2020 2021 2
Slide 41: Thank you
Thank you
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