Latitude CEO Ahmed Fahour to depart as company unveils 66pc profit drop

The CEO and managing director of consumer finance firm Latitude Group Holdings (ASX: LFS) has today announced he will leave the company by the end of August next year as the company releases its half year results to 30 June demonstrating a deterioration in statutory NPAT.

Ahmed Fahour, formerly the CEO of both Australia Post and National Australia Bank (ASX: NAB), will retire from Latitude by the end of August 2023, having helmed the fintech for nearly four years.

The outgoing managing director described the decision to leave Latitude as “difficult”, and reflected on his tenure with the company which saw him reset the firm’s strategy to build on customer and merchant relationships, simplify the product suite, and launch the business in Singapore and Malaysia.

Fahour also led the business’ acquisition of Symple Loans - which now serves as Latitude’s personal loans platform - and delivered the company’s IPO in April 2021.

“While this is a difficult decision, after four years as CEO, now is the right time to prepare for my departure next year and support the board as it plans for my succession as Chief Executive,” Fahour said.

“It has been a privilege to serve as CEO of Latitude and I am incredibly proud of everything the business has achieved.

“Getting Latitude ready for life as a public company and then realising that goal during a global pandemic with last year’s IPO is something that I am particularly proud of.”

The outgoing CEO said he was looking forward to the next phase of his career, and increasing his contribution to the community.

The announcement came alongside the release of Latitude’s 1H22 results to 30 June, which saw statutory NPAT drop by 66 per cent to $30.6 million, and follows Latitude's decision in June to break off a $250 million deal to acquire Humm's (ASX: HUM) buy-now pay-later business.

The company isn’t rattled though and is boasting its strong balance sheet position and $2 billion of funding headroom as of 30 June.

Operating expenses were down 9 per cent in the half when compared to 2H21, and flat against 1H21 despite additional costs of being publicly listed and the costs required for the integration of Symple Loans.

The company also reported loan volumes hit $3.7 billion in the half, led by its Money division (personal and auto loans) which was up by 9 per cent, and followed by its credit card division which was flat against the prior corresponding period.

“We have positioned the business to take advantage of the growth opportunities that we believe will emerge in the next 12-18 months,” Fahour said.

“Illustrating the strength of our loan portfolio, delinquencies remained low and we continued to reduce our costs and improve productivity, while we further invested in the business.

“Our strong profitability has allowed Latitude to declare a 1H22 dividend of 7.85 cents per share, which is fully franked.”

The company also provided some views on its outlook in the current economic environment, noting it has the capability and balance sheet strength to navigate future shocks to the system.

“Despite increased funding costs with the sharp rise in official interest rates in Australia and New Zealand, product re-pricing and other implemented measures will help offset the impact on margins. Latitude will gain further benefits from the full integration of Symple Loans, the growth in travel, cost discipline and productivity increases,” Latitude said.

“While unemployment remains low, Latitude anticipates delinquencies to stay below historical levels and it will persist with a prudent approach to credit underwriting. Receivables growth should be less affected by elevated repayments as higher cash rates erode excess consumer savings and governments end COVID-related financial assistance.

“Latitude’s instalments business will also benefit as the higher cash rate adds to the attraction of its ‘interest free’ proposition.”

Shares in LFS are up 0.63 per cent to $1.60 per share at 11.08am AEST.