Credit Corp defends post-earnings share price jump

The news: Credit Corp has backed its reporting to the market after its share price surged late last month, despite the debt collection company flagging a hit to full-year profit.

The numbers: Australia’s largest debt collector last month reported a statutory profit of $50.7 million, surpassing its guidance range of $35 million to $45 million, despite impairments in its US loan book. The company also provided a positive outlook for FY25. Consequently, shares surged nearly 15% on 30 July, and the stock was up 1.3% to $16.01 in early trading on Monday.

The context: In response to a query from the ASX, Credit Corp attributed the higher-than-expected statutory profit to a change in accounting policy by its board. Specifically, the adjustment to the purchased debt ledger accounting policy extended the collection life cycle from 6 to 8 years, resulting in a non-cash accounting gain of $15.1 million, the Credit Corp said. The company clarified that this change did not affect its underlying profit, which was down 11% for the year.

The lender also outlined higher profit expectations for FY25, citing strength in its consumer lending loan book, operational improvements in the US, and a stabilised Australia and New Zealand debt buying business.