The Credit Corp Group Ltd (ASX: CCP) share price is down over 12% today after reporting a disappointing FY26 half-year result.
Credit Corp is a debt collector and operates in Australia, New Zealand and the US. It purchases past-due debt from major banks, finance companies, utility providers and telecommunication companies. Credit Corp also provides car and consumer loans through its brands such as Wallet Wizard and CarStart finance.
HY26 result
Here are some of the highlights from the result for the first six months of FY26:
- ANZ debt buying and collection net profit fell 10% to $10.9 million
- US debt buying net profit jumped 63% to $11.7 million
- ANZ lending net profit fell 14% to $21.5 million
- Total net profit was flat at $44.1 million
- Dividend per share flat at $0.32
Let’s take a look at what happened to drive these numbers.
ANZ debt buying performance
Credit Corp said that ANZ debt buying and collection services revenue dropped 6% to $108.1 million.
It suffered from “disruptions to forward flow purchasing arrangements during the half”, with several issuers temporarily suspending debt sales. While much of this was remedied with the receipt of backlog files during December, it did impact collections.
This has been supplemented with several one-off purchases in December and January. This included a large run-off credit card book which brought the ANZ FY26 investment pipeline to $120 million.
Investment expectations for FY26 have increased to a range of between $120 million to $150 million. This additional purchasing will produce stronger collections and earnings in the second half.
There are early signs of increasing supply, though the buying market remains competitive. Interest bearing credit card balances increased by 12% over the six-month period.
ANZ consumer lending
It saw record half-year loan volumes in this segment, with new customer volume growth of 25% year on year.
Wallet Wizard has reportedly grown its market share of the credit impaired segment. Wallet Wizard saw its loan book grow to $442 million and it’s also progressing initiatives to sustain longer-term lending.
The Wizit digital credit card achieved 4,000 new customers over the half, with the book reaching $17 million in December.
In the UK, the company is building its systems and processes and remains on track to commence lending late in the second half.
US debt buying
Credit Corp said that the US operational performance continued to improve during the half – productivity was 41% higher year on year, while the book of payment arrangements (including litigated payers) finished 5% higher.
The company said it has been looking to improve its outsourced legal collections channel, so significant changes have been made to the composition and management of the third-party collection attorney network. Recent data shows signs of improvement.
Full-year US investment is now expected to be between A$160 million to A$180 million.
Credit Corp noted that there has not been a deterioration of collection performance since mid-2023, despite a modest increase in unemployment in the same period.
Acquisition?
Credit Corp continues to negotiate with Humm Group Ltd (ASX: HUM) about a potential takeover.
Negotiations about a suitable confidentiality agreement are ongoing and due diligence has not yet started.
A potential deal fits in with its goal of growing its consumer lending business, with the Humm UK business being consistent with its goal for the UK market.
Is the Credit Corp share price a buy?
The business is expecting that an increased proportion of purchased debt ledger (PDL) investment is now expected in ANZ, with an offsetting smaller component in the US.
It’s disappointing to see disruptions in ANZ and this isn’t the type of business I’d normally invest in. However, it’s trading at near five-year lows, so this could be a good time to invest for contrarian investors who think the business will see an improvement in profitability.
The business is expecting to report net profit of between $110 million to $110 million in FY26, making the current price/earnings (P/E) ratio in the high single digits, which looks low if profit grows over time from here.
But, there are other ASX growth shares I’d buy first in other sectors, such as technology, where the growth seems clearer.
