COVID-related stimulus measures in Australia and the United States had a negative impact on the business of debt buyer and collector Credit Corp, as the supply of purchased debt ledgers dried up.

However, the company made up for the weakness in the market by buying the Australian ledger book of rival Collection House, which went through a difficult refinancing last year and had to offload assets.

As a result, purchased debt ledger interest revenue was up 4.5 per cent to A$266.8 million.

Credit Corp’s consumer lending business was also affected by COVID stimulus, which resulted in “unprecedented levels of prepayment”.

The loan book fell from $230 million in December 2019 to a low of $153 million in September 2020, before recovering to $184 million in June this year.

Consumer lending revenue fell 2.7 per cent to $78.9 million.

Credit Corp made a net profit of $88.1 million in the year to June, compared with a profit of $15.4 million in 2019/20.

The big lift in earnings came about because there was no charge for expected purchased debt ledger credit losses in the year to June, whereas in 2019/20 there was a $68.6 million charge.

Adjusting for the COVID-related charge, underlying earnings rose 10.7 per cent. Australian segment profit was up 11 per cent, US segment profit doubled on the back of “operational improvements” and profit from the lending segment fell 29 per cent.

Aside from the Collection House deal, PDL volumes in Australia were down by about 50 per cent. US debt purchasing also fell sharply. The company said the investment pipeline for both Australia and the US is stronger in the current financial year and it expects a small increase in PDL purchases.

The company is looking to turn things around in consumer lending with the development of new products, some of which are in the pilot stage now.