Latitude share price falls despite 140% jump in profit during first half

ASX All Ords financial stock Latitude Group Holdings Ltd (ASX: LFS) is down 1.71% to $1.15 per share as investors digest the company's 1H FY24 results.

The company said it had experienced strong volumes and increasing margins during the first half.

Let's take a look at the numbers.

Latitude share price in the red despite profit uplift

Here are the highlights of the report:

• Statutory profit after tax from continuing operations of $9 million, up $101.4 million on the prior corresponding period (pcp) of 1H FY23 and up $19.3 million on 2H FY23
• Cash net profit after tax (NPAT) of $27.4 million, up 140% on pcp and up 69% on 2H FY23
• Volumes rose to $4.1 billion, up 14% pcp and up 2% on 2H FY23
• Receivables of $6.4 billion, up 3% on pcp up 2% on 2H FY23
• Net interest margin of 10.1%, up 31 bps on pcp and up 31 bps on 2H FY23
• Cash operating expenses of $165 million
• No dividend to be paid

What else happened in 1H FY24?

Latitude said it gained 128,000 new customers in 1H FY24, a 26% increase from 1H FY23 and a 10% increase from 2H FY23. This was led by a strong rebound in personal lending.

The rebound followed a difficult period for the company, which was hit by a cyber attack in March 2023. The attack involved the theft of customers' personal information.

What did Latitude management say?

Latitude managing director and CEO Bob Belan said:

We are pleased with this solid first half result and the overall acceleration in momentum across Latitude reflecting the strategic choices made to sharpen our focus on the fundamentals in our core markets and segments.

Origination volumes grew strongly through 1H24, up 14% YoY, as we began realising the benefits of actions to streamline and strengthen Latitude after a challenging 2023.

Money Division volumes have surged to record levels supported by the contemporary lending technology that came with the acquisition of Symple in late 2021.

As a result, Latitude's Australian personal loans book has taken over the #2 segment share position in the country (based on receivables by brand).

In a presentation, Latitude said dividends would remain on hold "as we invest in growth and lift profitability".

What's next for Latitude Financial Group?

The company expects elevated demand for its products to drive sustained volume and receivables growth from here.

Management expects margins to expand as a result of pricing and funding initiatives and a pivot in the interest rate cycle.

However, Latitude acknowledged that cost-of-living pressures on consumers would continue to slowly drive delinquencies higher.

Latitude said it has the balance sheet strength, funding flexibility and risk settings to capitalise on opportunities as they arise.

Meantime, management said it would remain focused on cost discipline to manage inflationary impacts and support investments in strategic and growth initiatives.

Price snapshot for this ASX All Ords financial stock

The Latitude share price is down 3.36% over the past 12 months.

By comparison, the S&P/ASX 200 Financials Index (ASX: XFJ) is up 29%, and the S&P/ASX All Ordinaries Index (ASX: XAO) is up 11.65%.

The post Latitude share price falls despite 140% jump in profit during first half appeared first on The Motley Fool Australia.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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