Buy-now pay-later user numbers soar for Latitude, profits up as loans business climbs

Buy-now pay-later user numbers soar for Latitude, profits up as loans business climbs

Four months after listing on the ASX, financial services company Latitude Group (ASX: LFS) has cracked into the black on the back of growth in its personal and car loans businesses.

The Melbourne-based company today unveiled a $89.5 million statutory net profit after tax (NPAT) for 1H21, up from a loss of $21 million last year.

The results were achieved despite the Latitude’s travel insurance business taking a hit from COVID-19 border restrictions, with Australian lending volumes partly driven by consumer demand in the home insurance segment.

Latitude CEO and managing director Ahmed Fahour said the results, just above the top end of guidance for cash NPAT, made the company the number two originator of new personal loans in Australia.

“This is a strong result that delivers cash NPAT just above the top end of guidance of $120 million for 1H21,” Fahour said.

“The 37 per cent volume growth in our personal and auto lending business across both Australia and New Zealand was particularly pleasing.”

During the half the company’s customer base for its buy-now pay-later (BNPL) product LatitudePay grew by 73 per cent to 458,000 open accounts, and approximately 2,000 new merchant partners were activated in the period.

The company also launched a pilot version of LatitudePay+ in the half - a BNPL product that will allow customers to make bigger purchases of up to $10,000.

Fahour said the rollout of Latitude+ put the company in a strong position entering the current half.

“Latitude is entering the 2H21 with a number of opportunities to grow our core instalments and lending businesses, as demonstrated by the acquisition of Symple Loans,” Fahour said.

“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.”

Looking forward, the company believes lockdowns will continue to slow economic activity, but it is optimistic once restrictions ease spending will recover quickly.

“Pent-up demand led to a 43 per cent increase in Latitude’s Victorian volumes in November last year, when restrictions eased in that state, compared to the monthly average for the previous three months of lockdown.”

Shares in LFS are up 2.58 per cent to $2.39 per share at 2.32pm AEST.

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