Key finance partner of Harvey Norman, Latitude Financial, has delivered a shock result, reporting a catastrophic 338% drop in after-tax profits.
The business behind Harvey Norman, who offers 48 month interest free deals, has posted its 2023 full-year financial results revealing it made a loss of $138 million in 2023, down from a profit of A$58 million the previous year.
Operating income was down 8% to $657.6 million.
Latitude Finance Australia’s GO Mastercard and Gem Visa offer up to five years interest-free on goods from Harvey Norman, Domayne, Joyce Mayne and many other retailers.
Last week it was revealed that customers who have signed up previously will now be hit with 3 points of extra interest on “expired promotional purchases”.
Debt that remains at the end of a 48 month Harvey Norman period will be hit, having to pay more money.
The company blamed the results on higher funding costs, as well as slower consumer demand, and the rising cost of living.
They haven’t said how much their funding of Australian retailers had fallen, in particular at Harvey Norman.
Chief Executive of Latitude Group, Bob Belan said, “2023 was undoubtedly the most challenging year in Latitude’s history.”
The personal loan company was hit by the largest data breach in its history last year, with the business claiming it cost them over $68 million.
It’s unclear how much of this cost is recoverable from their insurance cover.
Following the cyberattack, Latitude’s normal operations were disrupted for six weeks, as they had to stop lending and redeploy resources to contact millions of customers, and ex-customers, as well as beginning a “rebuild” of the business, including beefing up its cyber defences.
The privacy breach involved data being stolen from a third party using a Latitude staffer’s login details.
The breach prompted unprecedented co-operation between privacy regulators on either side of the Tasman Sea. Latitude told investors that borrowers continued to trust the company, continued to take out loans with it, and lending volumes were returning to normal.
Latitude has set aside A$49.6 million for customer remediation costs, future legal costs, and in case it has to pay fines as a result of regulators taking action against it.
The cyberattack resulted in a rise in missed payments on loans after the lender had to “pause” its pursuit of borrowers who were behind on their repayments.
It was also temporarily unable to increase its lending rates as a result of the disruption caused by the cyberattack.
The company said the cyberattack had resulted in costs of A$68.3 million for the company.
