Markets Live, Monday, 13 July, 2020 – The Sydney Morning Herald

Shares in the company were up by 2 per cent at $15.56 by 11am, outperforming a 1.4 per cent rise for the wider ASX 200.
Credit Corp said it will make a 13.5 per cent reduction in the carrying value of its existing purchased debt ledger assets. The firm said this represents an average of an 18 per cent reduction in forecast cash collections from existing debt assets against pre-COVID expectations for the next two years, before a recovery begins.
Elsewhere, loan loss provisions are expected to increase from 19 per cent of the gross loan book to 24 per cent, while the company expects to take up a provision of $11 million for the uneconomic component of commitments not yet re-priced.
Factoring in impairment and provisions, Credit Corps full-year profit is expected to be between $10 million and $15 million. Unaudited forecast put the initial profit figure between $75 million and $80 million.
Credit Corp said it expects persistently elevated levels of unemployment, the impact of which will be more severe for its credit-impaired customers.
As temporary support is reduced, (debt) collections will fall while loan book arrears will rise. The company said its response to this trend has been to seek to renegotiate ongoing purchasing arrangements onto more sustainable pricing, better reflecting the outlook for collections from freshly purchased debts. In the lending segment, auto and SME pilots have been suspended while lending criteria for the core loan product have been tightened, halving approval rates.

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