Latitude Financial Services Group (LFS) H1 2024 earnings summary

Executive summary

• The first half of 2024 saw a strong rebound, with volume up 14% year-on-year and a renewed focus on core fundamentals, driving profit acceleration and margin expansion.

• Statutory profit after tax from continuing operations rose to $9.0m in 1H24 from a $92.4m loss in 1H23, and cash NPAT increased 140% year-over-year to $27.4m.

• Strategic actions, including investments in marketing, customer experience, and broker relationships, as well as new partnerships with major retailers like Amazon, David Jones, and Officeworks, expanded the retail network.

• The Group exited unprofitable segments such as LatitudePay Asia and Symple Canada, focusing on core Australia and New Zealand markets.

• Notable items reduced significantly, with $26m pre-tax in 1H24 compared to $148m in 1H23.

Financial highlights

• Combined Pay and Money division spending and lending volume reached $4.1bn, up 14% year-on-year, with Money Division loan originations exceeding $1bn, up 60% year-on-year.

• Interest-bearing balances increased for 10 consecutive months to $4.7bn, highest since June 2020.

• Net interest income grew 2% year-on-year to $316m; total operating income rose 2% to $342m.

• Operating expenses decreased to $165m, down 3% year-on-year and 6% half-on-half; cost-to-income ratio improved to 48.3%.

• No interim dividend declared for 1H24; capital is prioritized for growth and profitability.

Outlook and guidance

• Favorable macroeconomic settings and elevated consumer demand are expected to support continued growth into H2 2024 and 2025.

• Margin expansion is anticipated as pricing and funding initiatives flow through, with cost discipline and strategic capital deployment remaining priorities.

• Delinquencies and credit losses are expected to normalize to pre-2019 levels, but employment is expected to remain resilient.

• Further funding activities are planned in 2H24 to maintain a robust and cost-effective funding program.

• Directors withheld an interim dividend, citing ongoing uncertainty from cyber incident-related costs and a prudent approach to capital management.