Australia’s leading retail Pawn Broking Company, Cash Converters has returned to profitability thanks to
payday loans after suffering multimillion-dollar losses in 2015. The fortunes of the company have been
turned around by the current online payday lending boom in Australia.
Cash Converters is popular for its bright-yellow pawnshops. The company shifted its business strategy
from traditional pawnbroking to profit from the millions of Australians looking for fast loans online. Cash
Converters plans to retreat from Britain and expand its network in Australia’s fast-growing online lending industry.
The company decided to change strategy after its share price plummeted 50% in 2015 following legal
amendments made in the UK payday loans sector.
According to Cash Converters MD Peter Cumins, the company will focus on Australia’s payday loan
industry where it is already a dominant market player. Cumins is convinced that Cash Converters has the
greatest chance of enjoying sustainable profitability in Australia. He plans on making payday loans an
integral part of the Australian financial sector by delivering high-quality financial products and services
while observing the highest standards of compliance.
According to Cumins, Australian government statistics show that Australia’s short-term lending market is
growing and the range of Australians accessing short-term loans is also broadening driving demand for online loans sophisticated lending products.
In the six months ending December 2016, the total value of Cash Converters’ payday loans increased by
62% to $8.2 million. The company’s online personal loans book grew by 42% to $44.6 million. Cash
Converters isn’t the only payday lender doing well. Money3 is also set to announce impressive results
and enjoy tremendous growth in 2017. The company has already bought online lender, Cash Train
which has already boosted the company’s online loans book by $7 million.
Besides selling its British stores, Cash Converters is also planning to sell its personal loan book worth
$16.9 million (£8.7 million) to boost investment in Australia. According to Cumins, the British network
has been struggling due to tough trading conditions. The company plans to sell its stores in Britain and
assume the role of a master franchisor. Cash Converters is also abandoning Carboodle, its auto financing
business because of weak growth. The company is planning to venture into secured motor-lending
Cash Converters will offer a wide variety of loans amounting to $5,000. It is estimated that 1 million+
Australians take out payday loans among other types of short-term loans every year. Back in 2012,
Australia’s short-term loans market was estimated to be worth $800 million to $1 billion. The industry
has grown tremendously since.
Cash Converters made a $15.9 million half-year profit in 2015 up from a loss of $5.3 million the previous
year. Dividend payment stood at 2¢ a share.