Credit Corp Earnings: Slightly Better Than Expected but Not Out of the Woods Yet

We lift our fair value estimate for no-moat Credit Corp to AUD 15.80 per share from AUD 15.00 due to stronger expected medium-term performance for the consumer lending division and adjusting also for the time value of money. During first-half fiscal 2024, NPAT in consumer lending tripled from the previous corresponding period, beating our expectations. This was due to strong volume growth prompting an uplift in volume guidance for the full fiscal year and tighter lending standards that kept arrears near 12-month lows. For the core debt collections business, stronger revenue in Australia was offset by a weaker U.S. performance.