Debt group sees upside in higher credit card balances
Kaaren Morrissey |
Debt collection Credit Corp is eyeing a recent rise in consumer credit card borrowings after posting a flat interim profit, on the back of lower earnings from its main Australian and New Zealand business.
The company, which also owns the Wallet Wizard small cash loans and Wizit “interest free forever” credit card businesses, generated a first-half net profit of $44.1 million, unchanged from 2025.
Credit Corp’s Australia and NZ debt-buying business suffered after several issuers temporarily suspended debt book sales, which in turn affected its collection volumes.
However, the group did buy several debt piles, including a large credit card book, over December-January.
This will underpin stronger collections and earnings in the second half of 2025/26, taking its debt ledger investment pipeline to $120 million.
“While the AU/NZ debt buying market remains competitive, as buyers attempt to secure volume in a diminished post-COVID market, there are some early signs of supply,” it said on Tuesday.
“Interest bearing credit card balances grew 12 per cent over the year.
“In time, this growth will likely be reflected in charge-offs and sales volumes.”
The most recent central bank data for November shows Australians in total owe more than $44 billion in credit card debt, with an average balance of $3624, as the national cost of living crisis continues.
Credit Corp, which has a US operation and is moving into the UK, also noted that the number of new Australian and NZ customers facing loan issues rose 25 per cent in the half year.
These are customers who face hurdles accessing loans or credit – prime targets for its unsecured Wallet Wizard small loans business.
“While Reserve Bank of Australia statistics indicate a modest recovery in unsecured credit demand, more granular credit bureau data suggests that credit impaired segment demand has remained flat,” the company said.
“Accordingly, Credit Corp’s market-leading Wallet Wizard product has succeeded in growing its share of the credit impaired market segment.”
The Wallet Wizard loan book hit $442 million in the half-year, while the Wizit digital credit card operation added more than 4000 new customers for a loan book totalling $17 million.
Credit Corp’s business is centred around consumers who have trouble with credit – most of whom have defaulted on a previous loan – sitting at the “risky end” of the market.
“We are more likely to encounter people in hardship or suffering from a vulnerability, so we have to be very responsible,” CEO Thomas Beregi said in a results briefing.
The Reserve Bank on Tuesday raised interest rates for the first time in two years by a quarter of a percentage point – a move expected to be passed on through borrowing rates across the nation.
Credit Corp’s earnings guidance for the 2025/26 financial year, of net profit growth of between six and 17 per cent to $100-$110 million, remains unchanged.
The company also confirmed that there had been little progress on its $385 million indicative offer made in December to acquire buy-now-pay-later firm Humm Group at a “sensible price” to expand its consumer lending arm, particularly in the UK.
“While we’re keen to acquire Humm, the outcome remains uncertain,” Mr Beregi said, noting that Credit Corp still hasn’t been able to get access to the target’s books.
Shares in Credit Corp, which has a stock market value of almost $1 billion, slumped by up to 16 per cent to $12 in afternoon trade, as the market considered the flat profit result and the Humm issue.
It will pay investors an interim dividend of 32 cents per share, unchanged from last year.
AAP
