Latitude boosted by personal, auto loans rise

Latitude posted its results for the first half of 2021, revealing its cash net profit had surged by 81 per cent year-on-year to $121 million.

The level of lending during the first half of the year had risen towards pre-COVID levels.

Volumes came to $3.6 billion, a 5 per cent increase on the previous corresponding period. Excluding the COVID-hit travel and international category, total volume grew by 11 per cent.

There had been growth in lending across both the personal and auto segments, with total loans for both divisions up by 37 per cent on the first half of 2020. Latitude credited its broker strategy, which included changes its broker portal to simplify the quote and application process.

Volume in the Australian business across loans and BNPL products grew by 1.7 per cent year-on-year, to $2.9 billion, driven by consumer demand in the home segment and domestic scheme spending.

Volume from local lending products was up by 6.5 per cent to a total of $1.3 billion, offsetting a 2.1 per cent fall in the buy now, pay later (BNPL) or instalments division, to $1.5 billion.

Australian personal loans in particular saw a 23 per cent rise from the year before, while auto loans were up by 60 per cent.

Meanwhile, New Zealand saw a 23.1 per cent rise in total volume, to $734.2 million, powered by a 37.2 per cent increase in its loans, to $185.2 per cent, and a 19 per cent climb in the BNPL business, to $359 million.

However, overall group revenue had dropped by 13.6 per cent from the previous year, down to $506.7 million in the first half and operating income took a 14.9 per cent hit, to $426 million.

Gross loan receivables also declined, down by 5.8 per cent year-on-year to $397.6 million – but it was mostly flat from the previous half, down 0.7 per cent.

Latitude explained that across both Australia and New Zealand, receivables had been affected by the compounding impact of COVID on volumes through 2020 to June 2021.There had been elevated repayment rates as a result of factors such as government stimulus packages and access to early superannuation withdrawals in Australia.

Latitude managing director and chief executive Ahmed Fahour commented the company is entering the second half of the year with a number of growth opportunities, including its recent $200 million acquisition of Symple Loans.

The Melbourne-based personal lending fintech will become the lending platform for all Latitude personal and auto loans.

Latitude has signalled that it will look to launch new products and build partnership with other lenders once the deal is complete, as well as expand its auto loans business into New Zealand and personal loans into Canada through Symple’s existing and established operations.

It is also looking to grow its BNPL business.

“We are accelerating our big-ticket BNPL offer LatitudePay+, which allows LatitudePay customers to make purchases of up to $10,000, we have relaunched our insurance product, and are well advanced in our plans for Asia,” Mr Fahour said.

While the current lockdowns across Australia and New Zealand have slowed economic activity, Latitude has forecast spending will rebound quickly once restrictions ease.

The company referred to pent-up demand in Victoria last year, which resulted in a 43 per cent surge in Latitude’s volumes when the state exited lockdown in November – compared with the previous three months.

Latitude’s board declared a first half dividend of 7.8 cents per share, which it expects to repeat at the full-year results.

Latitude listed on the ASX in April, valued at $2.6 billion ($2.60 per share). Despite the positive first half results, the group was priced at $2.37 a share on Tuesday afternoon.

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