Latitude Group (ASX:LFS) management used its full-year 2025 results briefing to highlight continued earnings momentum, record origination activity, and an improving cost profile, while outlining the next phase of its multi-year strategic plan.
FY25 described as another year of “profitable growth”
Managing Director and CEO Bob Belan said 2025 was “another strong year” for Latitude, citing “disciplined execution” amid more stable macroeconomic conditions and renewed customer demand. Belan said the company has now delivered “material growth in assets, revenue, operating leverage, and income” across several consecutive reporting periods, including record new customer originations and receivables at their highest level in five years.
Margin expansion and operating leverage drove higher profit
Belan said Latitude maintained a “disciplined and data-led approach” to balancing growth and margins. He noted net interest yield increased to 11.7% for the year, up 104 basis points, while credit performance remained within historical ranges and internal expectations despite labor market volatility and household budget pressure from inflation.
Management reported interest income of AUD 1.2 billion for FY25, up 11% year-on-year, and risk-adjusted income of AUD 573 million, also up 11%. Belan said the company invested more than AUD 20 million in growth-related initiatives while reducing underlying cash expenses by 3%, helping drive cost-to-income (CTI) down 800 basis points to 43.1%.
Cash profit before tax was AUD 211 million, up 36%, and cash net profit after tax was AUD 105 million, up 59% year-on-year, according to Belan. Return on tangible equity increased 702 basis points to 22.4%. The company ended the year with a tangible equity ratio of 7.1%, at the top end of its target range, and the board declared a fully franked second-half dividend of AUD 0.05.
CFO Guillaume Leger provided additional detail, stating revenue increased to AUD 1.2 billion, up 9% year-on-year, with revenue yield expanding to 17.5%. Net interest margin increased to 11.75%, up 104 basis points year-on-year, which he attributed to pricing actions, portfolio mix, and “disciplined funding execution.” Leger said risk-adjusted income yield rose to 8.28%, up 27 basis points.
Leger also said Latitude reduced corporate debt, improved advance rates and flexibility across its funding programs, and completed the buyback of approximately AUD 11 million of capital notes, which he said supported capital efficiency. He reiterated tangible equity at 7.1% and said return on tangible equity reached 22% for the year.
Dividend and capital management updates
Leger said the second-half dividend of AUD 0.05 per share brings the total FY25 dividend to AUD 0.09 per share. He noted franking was restored for the second-half dividend and described the distribution as representing a yield of 11.5% on a cash basis, or over 16% on a gross basis at current trading levels, while remaining aligned with the company’s capital plan and medium-term payout settings.
Credit trends “within expectations” as charge-offs normalize
Leger said volume growth remained strong, with total new volume up 9% year-on-year and 13% half-on-half, translating to 7% growth in gross receivables to AUD 7.2 billion. He said the company is growing “ahead of system” across its Pay and Money businesses in Australia and New Zealand, particularly in personal loans, where Latitude described itself as the leading non-bank unsecured lender in Australia.
On credit, management said delinquencies remained broadly in line with long-term historical ranges and within its target operating range. Leger said net charge-offs increased year-on-year in a “normalizing environment,” but remained within historical ranges and in line with point-in-cycle assumptions. Provisioning coverage was cited at 4.45%.
During Q&A, management told analysts it was “very comfortable” with current provisioning levels and said credit cost was “exactly where we want it to be,” describing a deliberate approach to taking risk in order to maximize risk-adjusted income. Asked about the rise in net charge-offs, management said charge-offs had been unusually low during COVID and had since returned toward normalization, with macro factors such as unemployment, inflation, and cash rates incorporated into provisioning and pricing.
Strategy shifts to Phase II “Bridge to the Future,” with focus on adjacencies and tech modernization
Belan said Phase I of the company’s “Path to Full Potential” strategy is now largely complete, with Latitude moving into Phase II, called “Bridge to the Future.” He said the next phase will focus on organic growth in segments where the company has “structural, capability, and scale advantages,” while accelerating expansion into new industries where Latitude believes its products can better serve customers.
To lead this effort, Belan announced the appointment of Stefano Tognon as Executive General Manager, Enterprise Growth, saying Tognon will build a team over time to serve the lending needs of a broader set of partners in industries Latitude has not historically focused on.
Management said Phase II also includes forging new partnerships with technology providers, accelerating modernization of its technology stack, lowering operating costs, and enhancing competitive capabilities, alongside additional investment in cyber defense and risk management.
In response to questions on measuring success in the next 12–24 months, Belan said growth in new adjacencies should ultimately show up through continued strengthening of the metrics Latitude uses today, including volume growth and profitable expansion, though he added the market “will need to be patient” as new segments begin to scale and “compound in due course.”
On margins, Leger said Latitude has tools to manage the impact of potential cash rate increases, including repricing products, continued improvement in funding spreads, and an increased hedging program, adding that the pricing of the “front book” implemented in the past year or two is better than the existing portfolio. “All of these points here tells me that our NIM should remain good and maybe even improve,” he said.
Looking ahead, Belan outlined four priorities: benefiting from stronger customer demand and prior growth investments through “volume-led growth in receivables,” maintaining a disciplined approach to margin management with net interest margin as a priority where trade-offs arise, monitoring macro impacts on credit performance (including labor markets, inflation, and central bank settings), and continuing prudent investment in cyber, technology, and growth initiatives across Australia and New Zealand.
About Latitude Group (ASX:LFS)
Consumer finance – instalments and lending
