Half Year 2026 Latitude Group Holdings Ltd Earnings Call Transcript
Key Points
- Cash profit for the half surged 39% year-on-year to $64.3 million, with statutory profit up 37%.
- Net interest margin expanded 27 basis points to 12%, and operating income margin improved 20 basis points to 12.2%.
- Cost-to-income ratio improved by nearly 400 basis points to 41.3%, with positive jaws of 9% as operating income grew 7% while cash operating expenses fell 2%.
- Total receivables reached $7.3 billion, the highest level in six years, with 148,000 new customers added and card transactions up 7%.
- The Board declared a fully franked interim dividend of $0.055 per share, marking the fourth consecutive increase, with a compelling dividend yield of approximately 12% (17% grossed-up).
- Funding strength was demonstrated with five transactions totaling $2.3 billion, diversifying the platform to 65 investors and $5.3 billion in warehouse capacity, while lowering funding spreads.
- The new Enterprise Growth division, targeting health and wellness and home services, is expected to become an increasingly important contributor to asset growth and earnings.
- Net charge-offs increased to 4.2%, reflecting ongoing macroeconomic pressures on household budgets and portfolio normalization.
- Delinquency rates, including 90+ days past due at 1.27%, continue to rise and remain above pre-COVID long-term averages.
- The company faces headwinds from three RBA cash rate increases during the half and persistent inflationary pressures, which could moderate originations.
- Provision coverage ratio increased to 4.59%, up 14 basis points, indicating a cautious outlook on credit risk.
- Management expects originations to moderate in the second half due to a pullback in consumer discretionary spending, though demand for debt consolidation loans may offset this.
- The tangible equity ratio, at 8.1% (or 7% pro forma after capital notes redemption), is at the top of the target range, potentially limiting flexibility for further capital returns.
Thank you for standing by, and welcome to the Latitude Group Holdings Limited half-year '26 results briefing. (Operator Instructions)
I would now like to hand the conference over to Mitchell Hawley, Head of Investor Relations. Please go ahead.
Thanks, Kate. Good morning, everyone, and welcome to Latitude's results briefing for the half year ending June 30, 2026. I'm Mitchell Hawley, Head of Investor Relations, and I'm joined today by our Managing Director and CEO, Bob Belan; and CFO, Guillaume Leger.
In the spirit of reconciliation, Latitude acknowledges the Traditional Custodians of countries throughout Australia and their connections to land, sea, and community. We pay our respects to Elders, past and present, and extend that respect to all Aboriginal and Torres Strait Islander people today.
I'll now hand over to Bob.
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