Encore Capital Group reported record collections in the third quarter in its American subsidiary, which helped boost the company’s overall net income to $73.5 million for the period, 41% higher than the same quarter last year. The company also touted its readiness to comply with the new debt collection rule from the Consumer Financial Protection Bureau and the returns it is seeing in its digital collection channels during a conference call with analysts last night. Even through the coronavirus pandemic, consumers are still “reaching out” for assistance with their financial recovery, Encore’s CEO said.
Through the first three quarters of 2020, Encore reported net income of $175 million, up from $126 million during the same period last year.
Collections within Encore’s Midland Credit Management unit were $391 million during the third quarter, 18% higher than the same period a year ago, according to Ashish Masih, Encore’s chief executive. Collections within the call center and digital channel were 32% higher than the third quarter of last year, Masih said during the call with analysts.
“Now what we did find is the pandemic environment in which perhaps consumers are behaving differently as banks also finding out in terms of how they’re paying off their debts or savings rates, their home mode, their perhaps opening mail mode, and responding to e-mails,” Masih said during the call. “There has been a marked shift increase of calling into us speaking account managers as well as engaging digitally.”
Masih said that Encore will not have any “significant incremental operational changes” in order to comply with the provisions of the CFPB’s debt collection rule, because the final rule looks a lot like the what was in the proposed debt collection rule when it was issued in May 2019. Other companies might not be so lucky, Masih warned.
“Some of the agencies and smaller scale players may have to invest a lot more and complying with the rules,” Masih said. “If you want to do digital, it takes a lot of fixed costs, and investing in digital for many years. So I would think it creates a benefit for people who are consumer focus, for people who are investing in these technologies and not waiting, and are going to be able to leverage those investments much more. And that’s what the consumers want, actually.”
