I believe what they’re talking about with “run-off” is in a very bad scenario where collections fall off a cliff - and they’re forced to to stop purchasing (due to insufficient cashflow) and just work the existing book.
One needs to understand that nobody knows what’s coming next, so a prudent management team needs to model for a variety of scenarios of worsening unemployment and collection rates in order to stress test the balance sheet.
We’re only 5 weeks into a shutdown, with a government backed job keeper program. So far collections are running -15% below expectations and consumer lending settlements -80%. Everyone is modelling scenarios with double digit unemployment, and effects for when job keeper rolls off.
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