1H 2016 Results, page-21

CCP branched into unsecured lending to give itself an alternative cash deployment option if it deemed PDLs to be too expensive, and having made that decision, management had to get the Loan Book up to a critical mass for that initiative to become profitable, and hence the advertising drive. Heavy marketing and heavy provisioning impacted H1, which impact should reduce in H2.

I think the Loan Book has reached the critical point at which management may be happy to lessen the growth tempo going forward. Also, getting out of the smaller SACC loans means that, on average, there are more interest-generating months to recover bad-debt provisioning, and provisioning itself may be reduced if the quality of the borrowers is better. Apart from the initial ramp-up of this lending business, management stated initially that the target profitability of it should be on par with the PDL business.

Increased attractiveness of PDLs, especially in the USA, may also reduce the need for an alternative target for investing in income-generating assets. If the USA pans out well, then there are other geographies into which CCP can expand in a measured way to give itself more cash-deployment flexibility. This is because problems in one country can be offset by investing in another.

A move into commercial finance could be worth considering, in my opinion. That is what TGA has done recently by starting up Thorn Equipment Finance to reduce TGA's reliance on consumer leasing, and the threat of regulatory interference, which is more a problem at the low-end of the non-commercial customer demographic.