Cashies profit slumps on new regulations

UPDATE 1.40pm: Cash Converters has posted a 46.4 per cent slump in first-half profit to $9.9 million as it adjusted to new regulatory requirements for its Australian operations.

However the company's revenue for the period was up 15.5 per cent to $155.8 million and the pawnbroker and short term lender said it experienced a record breaking lending performance in December with the positive trend set to continue.

Cash Converters declared an interim dividend of two cents a share fully franked, in line with the previous year.

The company said the major driver of revenue growth over the period was a $7.1 increase in personal loan income and a $15.8 million increase in corporate store revenue.

Cash Converters said the new Federal regulations on its short term lending practices had led to lower lending volumes and margin pressure on its cash advance loans. The new laws placed more controls on short term lending practices and the fees charged by lenders.

"Since a low point in September, lending volumes in Australia have been increasing and for the month of December, loan volumes returned to record levels for personal loans and cash advances," Cash Converters said.

"The improvement has been driven by our customers becoming more familiar with the documentation required to meet the new regulator requirements."

Managing director Peter Cumins said the company was pleased with improvement in the second quarter, particularly the solid growth in online loan products.

"Over the next six months, we should see the loan books continuing to grow and ongoing improvements in margin," he said.

Cash Converters shares closed down 3.5 cents, or 3.83 per cent, at 88 cents.