A surge in demand for so-called “pay day” loans has driven Cash Converters’ quarterly revenues significantly higher.
Cash Converters provides small cash advances and unsecured loans to customers, and operates a network of stores selling second-hand goods, in Australia and the United Kingdom.
Its latest trading update, released on Tuesday, showed revenue for the three months to March 31 rose 29.4 per cent to $85.3 million from $65.9 million a year earlier.
Financial services products – now delivered in-store and online in Australia – continued to be the main profit driver for the group.
Managing director Peter Cumins said the rise in revenue did not necessarily reflect tougher economic times for the group’s clients.
“My observation, after being in this business for 20 years, is that people generally spend as much as they earn,” Mr Cumins told AAP.
“With credit so easily accessible, we’ve now got a society where if you want something, you don’t save up and then buy it, you borrow money to buy it and worry about paying for it later.”
Mr Cumins said Cash Converters’ customers included welfare recipients, but more than 30 per cent of clients were people earning more than $50,000 a year.
He said Cash Converters’ lending products had been showing consistent growth for some years, and the recent rise in online services reflected a technological shift and customers’ desire for greater convenience.
A cap on the interest rate on loans, introduced by the federal government in July 2013, had also made loans more affordable even though they were still costly because they were unsecured and high risk.
Mr Cumins said most of Cash Converters’ clients cleary had the capacity to repay their loans because the group’s bad debt levels were very low for unsecured lending.
Cash Converters’ personal loan book in Australia grew by 24.4 per cent to $100.3 million for the three months to March 31, 2014 – up from from $80.6 million a year earlier.
The value of online personal loans in Australia increased to $14.6 million for the period, up 151.7 per cent on the previous corresponding period’s $5.8 million.
Shares in Cash Converters were 5.75 cents higher at $1.0875 at 1523 AEST.