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- Credit Corp Group (ASX:CCP) anticipates a 14 per cent impairment of its US PDL assets, affecting its FY24 outlook
- The impairment is due to worsening collection conditions, impacting assets acquired in FY22 and FY23
- A one-off reduction of $45 million in NPAT is expected
- Despite challenges, CEO Thomas Beregi is optimistic about the FY24 US investment pipeline
- CCP shares are down more than 30 per cent, trading at $12.03 at 11:05 am AEDT
Credit Corp Group (ASX:CCP) has warned of an upcoming impairment in the carrying value of its US PDL assets.
This impairment is expected to account for approximately 14 per cent of the carrying value of these assets reported in the company’s June 2023 accounts.
The impairment is projected to result in a one-time reduction in net profit after tax (NPAT) of $45 million.
The cause of this impairment is a sustained decline in collection conditions. The company noted an increase in delinquency in US repayment plans in its FY23 results.
Credit Corp has reevaluated its medium-term outlook for the collection of US PDL assets, particularly those acquired in FY22 and FY23.
The company is adjusting its FY2024 guidance. Although Credit Corp reported a 10 per cent year-on-year growth in US collections for July and August 2023, performance remained flat compared to the previous year in September 2023.
To account for this, the guidance for the US segment’s NPAT is being reduced by $10 million.
“Prices at which the FY2024 US investment pipeline has been secured should deliver the company’s target return in the current conditions,” Credit Corp CEO Thomas Beregi said.
PDL acquisitions are now between $200 – $250 million, with net lending volumes of $45 – $55 million, NPAT excluding impairment of $80 – $90 million, and earnings per share (EPS) at 51 – 66 cents.
Credit Corp Group was down more than 30 per cent, trading at $12.03 at 11:05 am AEDT.
