Credit Corp Group Limited · ASX:CCP

Credit — H1 FY2024 Earnings Presentation

25 slides from Credit's earnings presentation, Jan 31, 2024

  1. Slide 1: H1 FY2024 Results

    31 JANUARY 2024 H1 FY2024 RESULTS THOMAS BEREGI MICHAEL EADIE CEO CFO

  2. Slide 2: Leadership of the credit impaired consumer segment

    LEADERSHIP OF THE CREDIT IMPAIRED CONSUMER SEGMENT … ANALYTICS AND DISCIPLINE OPERATIONAL EXCELLENCE SUSTAINABILITY AND COMPLIANCE TARGET Australian / NZ debt buying Long term growth  Large database  High asset turnover 1  Low dispute rate  History of pricing accuracy  Low cost to collect 2  $

  3. Slide 3: In challenging conditions

    … IN CHALLENGING CONDITIONS … SEGMENT ASSESSMENT OF MARKET CONDITIONS CREDIT CORP RESPONSE US debt buying  PDL pricing reduced with continuing strong supply  Secure solid FY24 investment pipeline at historically low pricing  Collection environment more challenging since late FY23  Operational im

  4. Slide 4: Which have affected performance

    … WHICH HAVE AFFECTED PERFORMANCE … Recap of October 2023 disclosure: • Sustained deterioration in US collection environment - Increased repayment plan delinquency emerged in Q4 FY23 - Elevated delinquency persisted throughout Q1 FY24 • Reforecast of remaining collections to reflect a continuation o

  5. Slide 5: Has produced solid H1 underlying earnings

    … HAS PRODUCED SOLID H1 UNDERLYING EARNINGS H1 FY23 H1 FY24 Var % Australian / NZ debt buying $108.2m $118.3m 1 9% 1 US debt buying (pre-impairment) $47.0m $54.7m 2 6% 2,3 Australian / NZ lending $65.4m $82.0m 25% Revenue total $220.5m $255.0m 16% Australian / NZ debt buying $21.4m $13.5m (37%) US d

  6. Slide 6: Our focus remains on US operational improvement

    OUR FOCUS REMAINS ON US OPERATIONAL IMPROVEMENT…  Elevated delinquency first observed in late FY23 has stabilised  Productivity and collections are improving US Productivity Per Hour (US$) $ US Collections and Arrangement Book (US$m) $m $m 300 80 300 250 70 200 60 250 50 150 40 200 100 30 20 150 5

  7. Slide 7: To facilitate purchasing in more favourable US investment conditions

    … TO FACILITATE PURCHASING IN MORE FAVOURABLE US INVESTMENT CONDITIONS …  PDL demand impacted by higher borrowing costs and restricted access to credit  Credit data points to increasing PDL supply US Revolving Credit Growth US$bn 1,200 4.5% 4.0% 1,000 3.5% 800 3.0% 2.5% 600 2.0% 400 1.5% 1.0% 200

  8. Slide 8: And build our FY24 US investment pipeline

    … AND BUILD OUR FY24 US INVESTMENT PIPELINE  FY24 pipeline added at more favourable pricing US Purchased Debt Ledger (PDL) Investment A$m A$m 300 2,000 250 1,500 200 2 150 1,000 FY24 purchasing guidance - $130 - $140 million 100 500 FY24 contracted purchasing pipeline of 50 $120 million secured at

  9. Slide 9: Record H1 lending volume

    RECORD H1 LENDING VOLUME …  Strong consumer demand converted through efficient advertising  Record closing book will drive interest revenue over H2 Lending Volumes By Half Year Consumer Lending Book and Annualised Revenue $m $m 300 500 $414m 400 $204m $358m $201m $331m 200 300 $153m $150m $251m $1

  10. Slide 10: While maintaining credit quality

    … WHILE MAINTAINING CREDIT QUALITY  Arrears and losses remain within pro-forma levels  Arrears at near twelve month low 30+ days arrears 1 Loss Provision to Realised Losses (%) 1.3 30% 26.5% 24.1% 25% 1.2 20.7% 20.5% 20.3% 20% 18.6% 18.3% 1.1 15% 15.9% 15.9% 14.7% 1.0 10% 12.6% 11.8% 0.9 5% 0.8 0%

  11. Slide 11: Our leadership in responsible practice

    OUR LEADERSHIP IN RESPONSIBLE PRACTICE … H1 FY23 AU EDR Rate 1 12 months to Sep-23 US dispute rate 2 Credit Corp Credit Corp Publicly traded Other debt debt buyer A buyers Publicly traded debt buyer B 0 1 2 3 4 5 0 1 2 3 4 5 Rating of banks and debt buyers by financial counsellors in 2023 3 (score o

  12. Slide 12: Has helped maximise AU/NZ debt buying investment in a constrained market

    …HAS HELPED MAXIMISE AU/NZ DEBT BUYING INVESTMENT IN A CONSTRAINED MARKET AU/NZ Purchased Debt Ledger (PDL) Investment $m 400 350 300 250 200 150 FY24 purchasing guidance - $100 100 - $110 million 50 FY24 contracted purchasing pipeline of $90 million secured at Jan-24 0 FY19 FY20 FY21 FY22 FY23 FY24

  13. Slide 13: We continue to mitigate the loss of operating leverage as collections run off

    WE CONTINUE TO MITIGATE THE LOSS OF OPERATING LEVERAGE AS COLLECTIONS RUN OFF AU/NZ Collections, Cost to collect and Asset Turnover ratio $m 400 120% 350 100% 300 80% 250 200 60% 150 40% 100 20% 50 0 0% FY21 FY22 FY23 FY24 Projected Collections (LHS) Cost to collect (RHS) Asset turnover ratio (RHS)

  14. Slide 14: FY24 will be a year of strong investment

    FY24 WILL BE A YEAR OF STRONG INVESTMENT…  Advertising likely to be maintained over H2  US investment dependent on favourable pricing PDL Investment and Lending Volumes $m 800 700 600 500 400 300 200 100 0 FY19 FY20 FY21 FY22 FY23 FY24 Projected AU/NZ debt buying US debt buying AU/NZ secondary: Ba

  15. Slide 15: Funded from operating cash flow and existing credit lines

    … FUNDED FROM OPERATING CASH FLOW AND EXISTING CREDIT LINES Gearing and Cash Facilities Operating Cash Flow Pre-Investment $m $m 400 35% 450 30% 400 300 350 25% 300 20% 250 200 15% 200 150 100 10% 100 5% 50 0 0% 0 H2 FY22 H1 FY23 H2 FY23 H1 FY24 FY21 FY22 FY23 FY24 Projected Undrawn facilities and c

  16. Slide 16: Earnings guidance maintained with investment ranges refined

    EARNINGS GUIDANCE MAINTAINED WITH INVESTMENT RANGES REFINED FY24 GUIDANCE FY24 GUIDANCE REVISED OCT-23 REFINED JAN-24 Ledger investment $200 - $250 million $230 - $250 million Net lending $45 - $55 million $140 - $150 million NPAT pre-impairment $80 - $90 million $80 - $90 million NPAT statutory $35

  17. Slide 17: Appendices: Key operating metrics

    APPENDICES: KEY OPERATING METRICS Credit Corp Group H1 FY24 Results Presentation – 17

  18. Slide 18: Appendices: Key operating metrics

    APPENDICES KEY OPERATING METRICS Appendix 1: Operating cash flow and gearing 19 Appendix 2: AU/NZ and US operational debt buying metrics 20 Appendix 3: Payers base 21 Appendix 4: Productivity 22 Appendix 5: Collections life cycle 23 Appendix 6: Operational and total headcount 24 Credit Corp Group H1

  19. Slide 19: Appendix: Cash flow and gearing

    APPENDIX 1 CASH FLOW AND GEARING OPERATING CASH FLOWS AND GEARING FY21 FY22 FY23 H1 FY24 Collections $492.1m $535.2m $493.8m $234.8m Other income $108.8m $132.0m $198.1m $129.8m Interest expense / income ($4.3m) ($4.7m) ($15.6m) ($10.5m) Operating expenses including taxation ($210.6m) ($275.8m) ($29

  20. Slide 20: Appendix: AU/NZ and US debt buying operational metrics

    APPENDIX 2 AU/NZ AND US DEBT BUYING OPERATIONAL METRICS AU/NZ DEBT BUYING H1 FY2024 Δ H1 FY2023 Collections $140m (14%) Productivity $326 per hour 5% Operations headcount 1 635 (23%) Payers book 1 $1,317m (4%) US DEBT BUYING H1 FY2024 Δ H1 FY2023 Collections $95m 5% 2 Productivity $265 per hour 1% 2

  21. Slide 21: Appendix: Payers base

    APPENDIX 3 PAYERS BASE Portfolio Summary: Debt buying AU/NZ COMBINED AU/NZ/US 1 TOTAL PORTFOLIO DEC-20 JUN-21 DEC-21 JUN-22 DEC-22 JUN-23 DEC-23 Face value $8.6b $8.5b $7.9b $11.8b $12.7b $12.8b $12.9b Number of accounts 1,392,000 1,326,000 1,252,000 2,863,000 2,993,000 2,952,000 2,904,000 PAYMENT A

  22. Slide 22: Appendix: Productivity

    APPENDIX 4 PRODUCTIVITY Productivity Per Hour (A$) 1 $ 400 350 300 250 YTD DEC-23 AVERAGE: 200 FY2024: $299 150 FY2023: $294 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 12m to Dec-22 12m to Dec-23 1. Combined AU/NZ and US segment productivity Credit Corp Group H1 FY24 Results Presentati

  23. Slide 23: Appendix: Collections life cycle

    APPENDIX 5 COLLECTIONS LIFE CYCLE PDL Collections by Vintage 1 $m 160 (7%) 2 140 120 34% 29% 33% 33% 30% 32% 33% 37% 33% 32% 100 33% 33% 39% 35% 40% 41% 40% 32% 34% 19% 40% 30% 34% 34% 12% 12% 80 30% 31% 18% 13% 14% 19% 15% 20% 15% 15% 15% 13% 14% 16% 16% 18% 16% 14% 17% 17% 60 14% 16% 18% 25% 17% 1

  24. Slide 24: Appendix: Operational and total headcount

    APPENDIX 6 OPERATIONAL AND TOTAL HEADCOUNT Period End Headcount (FTE) 3,000 DEC-22 JUN-23 DEC-23 2,500 Debt buying operations 1,401 1,255 1,184 2,000 Collection services 558 1 571 1 613 1 1,500 Lending 243 231 253 1,000 Support 217 204 1 213 1 Total 2,419 2,261 2,263 500 Support % 9% 9% 9% 0 Dec-22

  25. Slide 25: For more information, please contact

    FOR MORE INFORMATION, PLEASE CONTACT: THOMAS BEREGI MICHAEL EADIE Chief Executive Officer Chief Financial Officer Tel +61 2 8651 5777 Tel +61 2 8651 5542 tberegi@creditcorp.com.au meadie@creditcorp.com.au

Credit Corp Group — H1 FY2024 Earnings Presentation on 6ix