Debt Collector Profits Soar With People Flush and Easy to Find

Bolstered cash collections helped profits more than triple at two of the largest publicly traded debt collectors, as stimulus checks and lockdowns left U.S. borrowers stuck at home with extra cash on hand.

PRA Group, Inc. said that cash collections jumped 8% to a record, while Encore Capital Group Inc. said revenue got a $66 million bump from better-than-expected collections. Operating expenses at both firms were also down significantly.

The results are another sign that an unprecedented wave of one-time checks from Washington, extra unemployment benefits and generous loan forbearance programs from lenders across the country have combined to help Americans stay afloat. Overall household debt fell for the first time in six years, the Federal Reserve Bank of New York said in a report this week.

“We attribute the strength in cash collections to a combination of stimulus in the U.S. and the fact that people are easier to reach when locked down at home,” analysts at William Blair wrote in a note on PRA’s results.

Shares of PRA Group and Encore have both climbed 22% this year.

“U.S. consumers have additional discretionary funds, and many are taking this opportunity to voluntarily resolve their debts,” Kevin Stevenson, PRA Group chief executive officer, said in a statement this week.

“It’s just an overall really strong environment cash-wise,” Stevenson said in an earnings call Thursday.

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