1. The banks charge anywhere from 15% to around 22% on their credit cards if you don't shop around. Some charge annual fees that can get pretty high. Then add the pay in 30 months companies that actually have administrative fees or mortgages where they require or they cannot approve mortgage without insurance...
2. If you look at CCP then they do charge a very high rate but you have to realise that they suffer huge losses - way more than what a bank would expect on its credit card issues. So they generated $37,534 ($000's) for the half year but they had to provide $15,647 ($000's) against that income. That does not take into account administration , debt collection charges and marketing costs. So if the banks are roughly half of the rate with their credit cards CCP actually add back almost 42% so say we start with 48% less 42% in bad debt then you net almost 28%. Yes its higher than the banks and some of the higher interest rate cards but you also forget that credit cards also earn a fee on what you spend as well and their bad debt ratios are very low. So CCP are in a high risk arena and manage it.
3. The claim is that very few of the people are approved for future loans - that's probably because those that use this to improve their credit rating get traditional finance from banks and those that don't actually don't exhibit financial discipline and therefore cannot get new loans. That statement in itself does not make them a payday loan. Its designed as a revolving credit but you choose to go elsewhere once you are creditworthy or you are not able to manage your finances. Not the product just the outcome.
4. The article suggests that they apply smoothing - I have often thought that and then I realise it depends on your objectives - If you are doing well and generating good cash flow then if you could find debt to purchase that meets your 16 to 18% net return you would use that excess cash to buy it as that is a far higher return than you would pay to increase your business way of acquisition. So as you expenditure on bad debt books increase they go through the income statement and the write off process would also occur. That process in itself will tend to have a smoothing effect.
5. You get some who say that this is a nasty business dirty and abhorrent feeding off the poor masses. Well if you look hard at smoking then the government and cigarette companies do exactly the same feeding off an addiction. Well I tell it like it is - I don't smoke so it benefits me that they pay very high taxes on cigarettes and thereby reducing my taxes. No-one drags the customer in - they need the cash and very often this is last resort funding... If CCP withdrew the customer would pay more - maybe you should be targeting banks who in my opinion only lend to those that actually should reorganise their affairs as the charges are outrageous and it would be better to do that. How many of you have had to resort to this type of funding because you parents/ friends cannot or wont help you? I got into credit card trouble in my early twenties and iot took me 3 years to pay it off and get on top of my finances - 1987 crash did not help but I learned valuable lessons.
6. The article suggests that Westpac should stop the funding - why should a bank not proivide funding to profitable risks - even payday loans. That's a political view if ever I saw one. Much like don't fund coal. I have had enough of the people in the dark shadows attacking things or then getting open support from the Greens and others to break the law and get applauded when the court then gives them a slap on the wrist.
7. The article does not have an author you can interrogate, does not have an entity you can find or an author that will put their name to it. Much like HC its all a view without someone you can sue for libel or whose credentials you can see. So what can we see - well I would suggest that you look to who has made money shorting and whether they close their position. This behaviour will continue until shareholders learn to decide that management behaviour is the key to the success or integrity of the company. I think that we are seeing a trend and it concerns me. I have no idea what Blue Sky is worth but it should never be an overseas organization that brings it to its knees. How much can you make by suggesting something is wrong in the business that maybe sells things that hide behind a counter rather than on open shelves. Who next a cigarette company who gets a report that a class action will prove that they knew ... and huge losses to follow... This needs to be stopped and the Federal police and their equivalents need to get to stopping the anonymous attack. I have no issue with facts peddled by people and organisations but this is something I hate.
8. A lot of shareholders including I bet a few that have this in their super took a decision to sell rather than hold yesterday and some took a significant bath - time will tell whether that was correct but really did they not deserve better. RHC has had its issues but at least the valuation is a reflection of concerns and detailed information not some vague report.
9. Up until now I have been tanking my lucky stars that I have avoided the GSW, BIG and BLA's of this era but this one got me. I have decided to stay put because I see cashflow , I see a growing USA business and profitability in sight in USA. Do I like the high risk book debt - I would probably be happier if it wasn't there but then everyone losses especially those needing loans who the banks turn away. Would you want them to go to loan sharks who would break their legs...
We now live in the era of opinions , we don't walk in anyone's shoes we just tell them what they should do. WE are the all knowing twitter , facebook and youtube experts all having an opinion and ready to rip someone a new ... if they don't listen. Forget bullying in the playground we the so called adults have got our outrage waiting whilst we dismantle the next object we don't like. Don't look too hard it could be your parents that sold their shares yesterday at $15.00 or below because of fear.
Hey is this business a nice one - No. It is about suffering but so are those that put businesses into administration , those that sell cigarettes and even bankers that end up telling us how hard it is on defaulting customers. Attorneys don't send out nice fluffy letters either. Some of those on HC have been at the receiving end of the company they invested in pursuing them (by paying the legal Fees of directors) on behalf of the person they thought would look after their investment...
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