Encore Capital reported net income of $32 million for the second quarter of 2024, up from $26 million during the same period a year ago. One reason, according to company CEO Ashish Masih, is the “record levels” of growth in the availability of portfolios to be be acquired, which is why the company’s Midland Credit Management unit deployed more money to acquire accounts than it ever has before. Here are some other highlights from the company’s earnings call with analysts from earlier this week.
In the U.S., the market for charged-off receivable portfolios continues to grow to record levels, driven by simultaneous growth in both credit card lending and the charge off rate. As a result, we continue to see very attractive pricing and returns in the U.S. Accordingly, we are currently allocating the vast majority of our capital to our MCM business in the U.S., which set another deployment record in the second quarter. Ashish Masih, CEO, Encore Capital Group
With both lending and the charge off rate growing simultaneously, purchasing conditions in the U.S. market remain highly favorable. We are observing not only continued strong growth in U.S. market supply, but attractive pricing as well. The most recent quarterly delinquency data reflects a typical seasonal pattern, but at meaningfully higher levels than a year ago. This data supports our expectation that 2024 will be another year of record portfolio sales by U.S. banks and credit card issuers. Masih
In terms of the consumer, I think, you’re alluding to the U.S. consumer. It’s been very stable and consistent from what we have seen last time, several months quarters, no real – no deterioration in any way of payment rates or people’s ability to stay on the payment plans. So it’s very much a normalized environment when you compare it to 2019 pre-pandemic. And it’s continuing – we are continuing to see that as well. And that’s showing up in a very strong collections driven by stable consumer behavior combined with higher purchasing, that’s driving increased collections Masih, when asked whether consumers were requesting longer payment plans, or if there were any signs of stress from consumers
