Afterpay play paying off for Latitude Financial
Consumer finance group Latitude Financial may have missed its second attempt at a public listing last year but the company has hit its prospectus forecasts with a $277 million cash profit for the year ending December 31, 2019.
The business, run by former head of Australia Post Ahmed Fahour, said it has continued to perform well this year despite the COVID-19 pandemic and added that it's buy now, pay later (BNPL) offer – Latitude Pay – was gaining traction in the market.
Latitude's latest numbers show a 12 per cent increase in earnings compared a year ago and the company said LatitudePay was close to signing up 350,000 customers across Australia and New Zealand since its launch in September.
Latitude, Australia's largest non bank lender, said it is currently signing new customers for LatitudePay at a rate of 50,000 a month and transaction volumes grew 30 per cent in Australia for the June quarter, with an average basket size of $290.
Ahmed Fahour said Latitude hit all of its financial targets for 2019 and has performed well during the pandemic. Credit:Elke Meitzel
"The performance of LatitudePay since its launch underlines the success of our interest free strategy which saw Latitude surpass all key financial targets for 2019,” said chief executive Ahmed Fahour.
The BNPL unit was launched last year to provide Latitude some share market sizzle as it prepared for a public float for the second time in two years.
Up to this point Latitude, formerly known as GE Money, had made about half its operating income from instalment loans, with most of the remainder coming from personal loans, auto loans and credit cards. Its business includes credit cards and point of sale financing at stores such as Harvey Norman, Apple and JB Hi-Fi.
Mr Fahour said Latitude's other credit card products, Go and Gem, have also prospered during the pandemic.
"Both GO and Gem have continued to perform strongly since the onset of COVID-19. We’ve seen a strong focus on shopping for the home, with significant growth in electrical and furnishings, and we expect this trend to continue," Mr Fahour said.
The former Australia Post boss stood to receive bonus shares worth up to $22.5 million if Latitude's initial public offering (IPO) had managed to great across the line last October, in what would have been the biggest float on the ASX for 2019.
Investment banks and brokers involved in the offer would have received fees worth as much as $60 million had they managed to drum up sufficient demand from investors to make the public listing on the ASX a success.
While there was enough demand to buy the billion dollars worth of shares on offer – valuing the company at $3.2 billion – the company said it wasn't enough to ensure a strong share price when the stock started trading on the ASX.
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