Q3 2022 Encore Capital Group Inc Earnings Call
It will be a question and answer session.
To ask a question during this session. Please press star one one on your telephone and you will hear an automated message advising your hand is raised please.
Please keep in mind that today's conference is being recorded I would now like to hand, the conference over to your Speaker, Bruce Thomas VP of Global Investor Relations. Please go ahead.
Thank you operator.
Afternoon, and welcome to Encore capital group's third quarter 2022 earnings call. Joining me on the call today are Ashish Masih, our president and Chief Executive Officer, Jonathan Clark Executive Vice President and Chief Financial Officer, Ryan Bell President of Midland Credit management, and Craig Buick CEO of Cabot credit management.
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And Jon will make prepared remarks today, and then we will be happy to take your questions.
Unless otherwise noted comparisons made on this call today will be between the third quarter of 2022 in the third quarter of 2021. In addition, today's discussion will include forward looking statements subject to risks and uncertainties.
Actual results could differ materially from these forward looking statements.
Please refer to our SEC filings for a detailed discussion of potential risks and uncertainties. During this call we will use rounding and abbreviations for the sake of brevity. We will also be discussing non-GAAP financial measures reconciliations to the most directly comparable GAAP financial measures are included in our earnings presentation, which was filed on form.
8-K earlier today.
As a reminder, this conference call will also be made available for replay on the investors section of our website, where we will also post our prepared remarks. Following the conclusion of this call with that let me turn the call over to Ashish Masih, our president and Chief Executive Officer.
Thanks, Bruce and good afternoon, everyone. Thank you for joining us.
I'd like to begin by noting that our performance in recent years and the disciplined execution of our strategy has put us in a position of strength.
To navigate the evolving macroeconomic environment that we and many companies face today.
Against this backdrop oncor delivered solid operating performance in Q3.
However, as we stated last quarter, we will face some pressure and earnings over the next few quarters due to the impacts of the evolving macroeconomic environment.
As expected.
Third quarter collections declined due to our lower level of global portfolio purchases over the last two years and the continued normalization of consumer behavior in the U S.
In addition, cabot's results were impacted by the weakening of the British pound and the euro in relation to the U S dollar.
However, and importantly, Q3 was our strongest quarter of portfolio purchasing in two five years driven by the steady growth in supply that we announced the particularly in the U S.
On a global basis, our portfolio purchases with $233 million.
Up 38% compared to the third quarter last year enabled by improving market supply in the U S.
Before we discuss the key markets in which we operate I believe it's helpful to reiterate the critical role we play in the consumer credit ecosystem by assisting in the resolution of unpaid debts, which are an expected outcome of the lending business model.
Our mission is to help consumers resolve their debts. So they can regain the freedom to focus on what is important to them.
And we do that by engaging consumers and honest and pathetic and respectful conversations.
We look to purchase portfolios of nonperforming loans at attractive returns, while minimizing funding costs.
For each portfolio that we own we strive to exceed our collection expectations.
While both maintaining an efficient cost structure as well as ensuring the highest level of compliance and consumer focus.
We achieved these objectives through a three pillar strategy.
This strategy enables us to consistently deliver outstanding financial performance and positions us well to capitalize on future opportunities in.
And we believe is instrumental and building long term shareholder value.
The first pillar of our strategy market focus concentrating our efforts in the markets, where we can achieve the highest risk adjusted returns.
The macroeconomic induced changes to consumer behavior during the pandemic led to unusually low credit card balances and below average charge offs, which in turn resulted in lower portfolio sales by banks. However, since early 2000.
'twenty one outstandings have been rising as banks continue to report strong growth in lending in fact earlier this year revolving credit in the U S surpassed pre pandemic levels.
And each month thereafter, the U S. Federal Reserve has reported a new record level of Outstandings at.
At the same time in the U K credit card balances continued to steadily recover, albeit at a slower pace.
We believe that the combination of continued lending growth and charge off rates, which are rising from pandemic. Lowe's has now begun to translate into increased industry supply in the U S.
These dynamics are leading to higher levels of portfolio sales by banks in the U S market.
Which is evident in the steady growth in our purchasing this year reach.
Reaching a level in Q3 that is similar to the pre pandemic 2019 quarterly average.
This also means that more consumers will be looking to resolve the debts in order to regain their economic freedom and our team stands ready to support them.
This growth in purchasing has also manifested in our estimated remaining collections or ERC.
Which while declining 7% on a reported basis to seven $3 billion grew.
We grew 2% in constant currency to $8 billion.
Turning now to our largest and most valuable market in the U S.
Yes.
MCM collections in the third quarter were $325 million.
Down 20% compared to Q3 last year.
This decline was due to the impacts of macroeconomic factors that led to lower purchasing in 2020, and 2021 as well as the normalization of consumer behavior.
I would like to note that this collections level is in line with Mcm's average quarterly collections before the pandemic began.
Despite significantly lower purchasing during this two year period.
Which is a testament to the improvements we have implemented in our collections operation.
Against this backdrop of growing market supply in the U S.
MCM had its strongest purchasing quarter in two and a half years portfolio purchases in the third quarter were $177 million, an increase of 73% when compared to $102 million in the same quarter last year.
Okay.
Turning to our business in Europe .
Another outcome of the evolving macroeconomic environment is the weakening of the British pound and the euro compared to the U S dollar.
Because the reported results from our cabinet business in the UK and Europe were noticeably impacted by the significant changes in foreign currency exchange rates during the quarter.
We have provided constant currency comparisons in addition to reported results in this presentation.
We're retards it provided additional insight into our underlying performance.
In the third quarter Cabot collections were $132 million as reported.
Down 15% compared to Q3 of last year.
But in constant currency equals.
Equal to the collections level.
A year ago quarter.
We continue to closely monitor the macroeconomic environment in the UK and despite inflationary pressures and consumers are back book of regular peers have seen no impact.
Another macro trend that we have been focused on is the continuing labor market tightness in the UK.
Our collection staffing levels have been affected by this pressure.
But it has resulted in only a mild impact to collections.
Cabot portfolio purchases in the third quarter as reported were $56 million compared.
Compared to $66 million in Q3 of last year.
After adjusting for the currency exchange impact.
Our repurchases in Q3 were at the same level as a year ago.
From a portfolio supply perspective markets in the UK and Europe continue to be competitive and we have maintained discipline in buying portfolios.
The second pillar of our strategy focuses on enhancing our competitive advantages.
Although our cash generation has been impacted by lower portfolio purchasing in recent quarters and the normalization of consumer behavior.
Especially when compared to last year's extraordinary levels.
Our competitive platform enables us to generate continue generating significant cash flow.
We expect this decline will begin to reverse as the purchase volumes become consistently higher.
Our competitive advantages also allow us to deliver differentiated returns.
And return to cash generation.
In addition to cash generation another important measure of our business is return on invested capital.
Which considers both the performance of our collections operation as well as our ability to price risk appropriately when investing our capital.
Accordingly.
One of our fundamental financial priorities is that our underlying business delivered strong long term returns.
We believe we are delivering returns that are very attractive when compared to those of our peer group and the debt buying industry.
The third pillar of our strategy makes the strength of our balance sheet a constant priority.
Our strong operating performance and focused capital deployment over many consecutive quarters drove higher levels of cash flow and contributed to a lower level of debt, which in turn reduced our leverage significantly over time.
At the end of the third quarter, our leverage ratio was two one times compared to one eight times a year ago and remains near the lowest in the industry.
It is important to note that when compared to the pre pandemic years Oncor is a much stronger company when it comes to our balance sheet and capital availability.
In addition to lower leverage we now have a unified global funding structure, which provides us with financial flexibility, including diversified sources of financing and extended maturities.
Two our strong balance sheet, we remain well positioned with sufficient liquidity and capacity to fund the opportunities that lie ahead.
I would now like to hand over the call to John for a more detailed look at our financial results.
Thank you Ashish.
When comparing third quarter or year to date results. This year to results from a year ago keep in mind that the elevated level of collections last year was extraordinary and resulted in part from U S. Consumer behavior that was has largely normalize since the beginning of 2022.
We continue to effectively manage our cost base operating expenses remain well controlled despite inflationary pressures.
Importantly, the same normalization of consumer behavior in the U S that has led to year over year declines in collections is beginning to drive an increase in market supply.
This is reflected in our Q3 portfolio purchases, which are up sharply compared to a year ago.
For those of you who closely follow the results of financial companies you understand that seasonal accounting may cause fluctuations in quarterly reported results, but that they do converge with cash results over the long term.
This is yet another reason that we believe it's always helpful to consider the long view of our financial results, whether it's over trailing 12 months as many of our important metrics are measured on a year to date basis as reported in our filings.
This is consistent with the way, we run the business and make decisions employing a long term perspective and building shareholder value.
Collections were $458 million in Q3 down 19% compared to the extraordinary collections in the third quarter of last year.
Net result down into our two major businesses Mcm's collections in the U S declined 20% compared to Q3 last year.
Early due to lower portfolio purchasing in recent quarters and the normalization of consumer behavior in the U S.
Cabot's collections in the third quarter declined 15% as reported due to the foreign currency effect of a weakening British pound and euro. However, after adjusting for the relative movements in currency Cabot's collections in Q3 were flat compared to the same quarter last year.
Four portfolios owned at the end of 2021 Encores Global collections performance through the third quarter was 105% of our portfolio ERC forecast weighted as of December 31, 2021.
For MCM and for Cabot collections from Q3 by the same measure were 114% an 89% respectively.
With regard to collections in Europe , the weakening of the pound and euro in relation to the U S. Dollar has created a separation between the reported and constant currency results.
In this case cabot's collections performance through Q3 on a constant currency basis was 96% of our ERC forecast.
In addition to the impacts I've already mentioned the global macroeconomic environment has also led to higher interest rates and challenging conditions in the bond market for us and other companies.
Nonetheless, it is times like these that our global funding structure provides us a financial horsepower to approach the growing supply environment position of strength.
We believe our strong balance sheet provides us very competitive funding costs, when compared to our peers and competitors.
While we don't have any material maturity for the foreseeable future, we do monitor market conditions closely and adjust our return thresholds and pricing for new portfolios Accordingly.
In this environment, we believe higher financing costs will eventually have a moderating effect on portfolio pricing is that buyers adapter bidding behaviors to their higher cost of capital.
Our interest expense in the third quarter was $39 million.
Compared to $41 million in Q3 last year.
Looking ahead to the fourth quarter, we expect our interest expense to be in the low to mid $40 million range, depending on rates and FX movements.
With that I'd like to turn it back over to Ashish.
Before I close.
I'd like to remind everyone that the financial priorities that we have established.
Some time ago remained unchanged.
Our strong balance sheet will serve us well as the highly anticipated growth in market supply strengthens.
We will continue to be good stewards of your capital and as always we will maintain our focus on returns in order to build long term shareholder value.
By executing on our strategy and by staying true to our financial priorities. We believe we are exceptionally well positioned for the future.
We believe the changes we are now seeing in the macroeconomic environment in terms of the normalization of consumer behavior as well as the growth in portfolio supply are clear indicators that the next phase of the consumer credit cycle is upon us.
This also means more consumers will need our support and we are ready to help them resolve their debts and restore the financial health consistent with our mission and the essential role we play in the consumer credit ecosystem.
As we discussed in our previous call, we expect the impacts of an evolving macroeconomic environment to pressure our earnings for the next few quarters due to two years of lower portfolio purchasing coupled with the normalization of consumer behavior in the U S.
Importantly, this same normalization of consumer behavior has begun to increase portfolio supply in the U S with consumer spending and lending growing.
In charge off rates starting to rise from pandemic lows.
In fact, the supply growth enabled our MCM business to deliver its best purchasing quarter in Q3 since the pandemic began with.
With deployments, 52% higher versus Q2 2022.
And 73% higher versus Q3 2021.
This growth in purchasing also enabled our ERC to grow 2% to $8 million in constant currency terms at the end of Q3.
While supply is now steadily growing in the U S. Keep in mind that it will take sustained higher portfolio purchases before material contributions to our financial results are evident.
We see a growing supply pipeline ahead for 2023 as the credit cycle turns.
Keep in mind that approach using purchasing can fluctuate on a quarter to quarter basis.
I am truly excited about oncor strong position as we have the required operational capacity and ample liquidity to take advantage of the growth in portfolio purchasing opportunities in the marketplace.
Now we'd be happy to answer any questions that you may have.
Operator, please open up the lines for questions.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question. Please press star one on your telephone and wait for your name to be amount.
Please standby, while we compile the Q&A.
Sure.
Okay.
David Scharf at JMP Securities. Your line is open.
Especially with your question.
Thank you.
Good afternoon, Thanks for taking my questions.
Hey.
Two things I wanted to.
Touch on the first is and it's something I haven't.
Paid much attention to it.
While.
Which is labor costs and I appreciate the.
The commentary about labor costs in the U K and it actually.
Kind of prompted me to.
To remind myself to ask.
Can you update us.
Once again.
Sort of what percentage of the company's collections.
Yeah.
Come out of your Indian based call centers.
It's always been obviously, a differentiator and kind of lost track over the years, especially as Cabot has built out how much is coming out of there.
And whether it.
And maybe if you can just give us a little.
Kind of background and what kind of inflation in the labor markets.
Looking like over there as well.
Yes.
Hi, David Thanks for your question there.
So inflation clearly is out there in the labor markets and it shows up more in certain pockets of certain.
Skills and functions versus others in different geographies as well.
And overall, we have not had any material impact on our SMB expense as a result.
And while clearly we have had on our raises and so when such things to do in pockets, we've been able to mitigate that through automation and efficiency improvements. So overall I would say that's kind of the outcome across all our geographies.
Now regarding your earlier question on what.
What percent of collections come from India.
We don't think of it that way from an India as part of an integrated call Center operation. It provides back office services provides a whole range of services and it's part of.
Part of the company, so and cloud can be routed and starting one place routed in another place and in the third place. So we don't think of it that way and that's not something we've disclosed or think about it we look at maximizing net collections, which is maximizing overall gross collections net of total expenses.
The best I can provide you but to your question on inflation, I mean, thats impacting pretty much all labor markets, but it depends on kind of the job and function as well.
Got it got it.
The color and.
Follow up I guess the question really on everybody's mind.
Regarding kind of the.
The macro backdrop.
I've only got one question in months from investors and it is not so much about timing.
But.
They all acknowledge the eventual pickup and asset growth. They all acknowledge that amongst financials and specialty finance companies Youll, probably experience asset growth rebound earlier than.
And then your lending counterparts.
But.
Many of them have kind of long memories from prior cycles.
Drip drip drip of allowance charges kind of ruled the day in a pretty seasonal world.
And I guess I don't know if you can answer this.
And maybe it's for Jonathan.
Broadly speaking when you think about you.
Youre forecasting and credit models.
We're coming off of a dozen or so years.
Zero percent fed funds, which will never happen again.
Got 40.
Inflation that we haven't seen it for decades and so.
So arguably theres theres more uncertainty about what kind of the world looks like when we come out on the other side of what the new normal is.
Did you.
Do you view your forecasting models, even though <unk> been in business for decades.
No.
This.
As current as you'd like I mean, I am just trying to get a sense for.
Relative to that $13 million negative adjustment Cecil adds more quarter to quarter volatility.
It's that line item that im candidly getting the most questions about I think if people.
Get a fair degree of comfort.
It's not going to be kind of a 90 day event.
A lot easier to sort of gauge downside earnings risk so.
It's a long long winded way of asking you do you feel like the macro environment is just something totally new the company Hasnt.
Hasn't really experienced before or do you think this is just going to play out like every other credit cycle and merge obviously very strong on the other side.
Yes definitely lot of factors in play and that question David.
I would say as all banks are discovering as they try to forecast their provisions and whatnot.
This is a bit of a different cycle right. So the pandemic induced.
Consumer behavior was very unusual so let me just take you back and paint a little bit of a big picture during the pandemic consumers had lot of excess cash and savings and they paid down their credit card balances.
<unk> paid down debt outstanding debts, So our earnings.
Were exceptional and that helped drive our exceptional earnings in collections and that time now.
Now I think is the consumer behavior is normalizing and many of the banks earnings calls that we read and call it credit normalization.
And it's not fully there yet, but it is getting there so lending is growing pretty significantly.
Loss rates, whether it's in delinquencies or charge off rates are starting to pick up but they're still not back to pre pandemic levels, even though lending is back to pre pandemic levels.
So we continue to monitor this.
We have not seen any impact on our collections, we are absolutely seeing impact of loan purchasing over the last two years, but now that is starting to grow because lending is growing and charge off rates are picking up so supply is definitely growing and it's much more clear in the U S.
That kind of dynamic did not play out as much in UK and Europe in terms of the excess cash and so forth. Although delinquencies are still lower in European and U K. So.
So we do our best.
We do put our best forecast.
<unk> every quarter, but.
It's definitely a new world, but it is starting to evolve to the new normal what is pretty clear to us as we are entering a growth phase of the cycle, particularly in the U S is lending is at record levels and charge off rates are starting to pick up and if you look at a whole range of data out there, which we look at.
Consumers cash our balance sheets are still good although they are better at higher income versus that the lower income levels, so due to inflation and other.
Other drivers some segments of their consumers will get pressured more as we move forward.
That said the unemployment rate is still low so depending on how the impact of fed rate increases play out.
It's going to get impacted as well, but we feel very good about the overall picture. We have place we are in in terms of the economic cycle.
Entering the growth phase of the cycle, particularly in the U S, which is the largest and most profitable market.
Got it very helpful. Thanks, so much ashish.
Thank you Russell.
Thanks, Paul.
<unk>.
Yes.
Mark Your line is now open.
Thank you and good afternoon.
And again anything.
Any perspective on the $13 million.
Change in the collections in the quarter I saw the breakout was $5 million of underperformance, plus 8 million change in forecast.
He placed in particular and.
If we're in this kind of down part of the cycle at least in terms of collections.
Things gear back up this.
Something that we might anticipate in coming quarters.
Hi, Mark.
That's a great question and I have to say what do I anticipate will.
Our goal is to have this number zero right because at the end of every quarter. We of course try to make the best estimate we can.
And you're correct. The breakout here is a split between.
Current collections and changes in future recoveries I have to say there were a number of I can go across vintages and pool groups across the country.
Companies and there are both ups and downs right.
So my takeaway is we are moving away from this macro event, which from my perspective.
Led to all pools, becoming highly correlated and thats, what macro events tend to do.
And I think we're moving into a period, where we will have ups and downs. So.
And as Ashish mentioned earlier in the call right there will be some.
Volatility quarter on quarter.
But I think the long term trend is for it.
If you look at the.
Previous.
Here is an example.
We were off for 2021 for the same period in three months.
We were off about $66 million. So yes. It was moved in the positive direction, but we were off.
<unk> more than we are this quarter right. So I think you can expect that the volatility will be reduced in and as we move forward.
Forward, we're going to have ups and downs, both on an aggregate basis and importantly on a pool by pool basis as I said I do believe that.
The macro impact is waning and now we will have pools that will react as pools do independently.
And then.
And then your point about the consumer.
Do you see any deterioration I think you might've said when you look at the UK back book.
Payers are consistent.
Yes.
And I know youre seeing normalization in payment rate, but.
Is there any sign of a.
Recession kicking in or the impacts from inflation.
Mark This is ashish can jump in so the normalization I have talked it's much more relevant to the U S consumer who had excess cash and paid down the debt and now is normalizing now.
To your very specific question on UK, we are not seeing any impact yet on our back book in terms of payer rates or retention rates.
Even though the news absolutely is about inflation and low energy prices and so its kind of things.
Which could impact things in the future, but to date, we have not seen any impact on.
The back book and UK now.
Now I just also wanted to add one more bit of <unk>.
Commentary to John's point, so he highlighted the fluctuation.
As you know seasonal accounting.
Given how different it is from the preseason days back in 2019 in prior years.
May cause these fluctuations in quarterly results, but I do want to.
You kind of mentioned that the.
<unk> always and they do converge with cash results over the long term.
We do our best on forecasting.
But quarter to quarter, whether you exceed or miss a forecast or or change the forecast both of those phenomenon cause.
Lee volatility, but long term it converges with cash.
I don't have the Q in front of me do you happen to have the expected collection multiple through nine months for two.
<unk> 2022 paper for the MTN in cabinet.
On a year or so.
The current purchase multiple.
For the 2022 vintage is two one for U S.
And one nine for Cabot.
And then when you think about the supply I hear what youre, saying about the.
Balances or.
Charge off rates are starting to recover it almost sounds like.
Your purchasing or your view of supply is ahead of that is there some dynamic.
The banks are selling more or are they doing to get ahead of.
The cycle.
With their behavior, a little bit different or would you say that this is just consistent.
Consistent with the underlying.
Level of charge offs that are coming into the system.
Yes, I would say the underlying the behavior of all banks is very consistent all banks used to sell before the pandemic are still selling in a very similar way this quarter to quarter or over a few months changes in strategies. Some mid sell some bulk they've accumulated the always doing champion challenger between.
Servicing and agencies and law firms versus selling for example, our internal capacity, but in terms of overall behavior consistent what we have seen is very steady increase and when we look at our flow that lasts for a long time steady increase month over month in their charge off volume.
So thats, giving us the confidence kind of how the volumes are rising and they are lending more and even if the charge off rate ticks up a little bit even though it's below pre pandemic the volumes have been consistently rising.
Ryan anything to add from your front.
I think we're seeing the combined impact of lager, a number of outstanding and an increase in charge off rate. So the multiplicative impact of that as you see a pretty significant growth and supply and then purchasing.
Thank you.
Thank you maam.
Mike Grondahl Northland capital markets. Your line is open.
Hey, guys, just as a follow up to that.
In the U S. You said, you had $177 million of purchases in <unk>.
November 2nd today.
For Q U S purchases looking and any comment on forward flow commitments that are in place.
Mike Thanks for your question, but.
In the past be and we will be unable to comment on kind of how the month is going things change I mean, it's still very early in the quarter, what I would say is.
Poor flows that are there they are consistently a steadily growing month over month now flows are not the only way, we buy especially in U S. So even in U S, where there are spot deals off and on.
So quarter to quarter fluctuation can happen.
But I might point out kind of the steady trend that we're seeing.
Over the year and you compare to 2019, we are growing our purchasing but quarter to quarter, there could be fluctuations of course.
At this point I am unable to provide any more color on how the fourth quarter is progressing.
Got it.
Sort of.
At a very high level Ashish what would you say.
The average lag is.
Portfolio purchases in a quarter.
Begin to show up in revenue collections revenues and earnings.
Is that about a two quarter lag or would you even say a little bit more.
That's a pretty broad question it depends on the type of portfolio.
So, let's say the collection start coming in kind of the start pick up pretty soon.
But we work on just getting contacting consumers getting them on the right kind of plan and then depending on the type of portfolio. The expense profile can be quite different for example, low balance portfolios on a per unit basis the cost the same.
Versus others, but we may pay different prices and our return expectations are very consistent so it just the earnings profile can look different.
Our low versus high balance and of course, there are some very specialty kind of portfolios that are not just typically refresh that may have you been a different profile.
But I would say no.
Revenue start immediately after you purchase collections profile may.
Maybe a little bit disconnected, but then it catches up and over the life of course they match.
Got it and then maybe one quick one for Jonathan did you buyback any stock in the quarter.
So.
The number of shares and the dollar amount maybe.
Yes.
We did.
<unk>.
Okay.
We repurchased.
Approximately 457000 shares.
For $26 million average price of $56 68.
Got it okay. Thank you.
Yes.
Yeah.
Thank you.
Winder, if you'd like to ask a question. Please press star one on your telephone.
Our next question comes from Robert Dodd at Raymond James Your line is open.
Got it all too well a couple of questions first on the U K when it comes or cap obviously, the UK is the largest piece of Cabot.
Cabinets at 30 and collection.
Looking looking forward could you.
This is hello, a question how.
The environment heading into winter with utility bills on the subsidies et cetera, all caps, but still I mean have you factored that in.
<unk> two <unk>.
Presumably yes.
And do you expect to collections that are out of that market how much.
Yes.
Anything is that influence.
It really did.
Some of the decline in expected future recoveries in that $13 million is that a function of elements like that which.
Really what was an issue necessarily three quarters ago, and governmental and stability in the U K to put it lightly. So can you give us any color on how thats all factored in.
Year over that.
A lot of elements as you mentioned correctly I'm going to let Craig.
Respond to that he has joined us from the UK by phone.
Yes, hi, Robert Thank you.
Thanks for the question.
Look I think the U K market and certainly an interesting place right now with what's been happening on the political front and then obviously on the macroeconomic side of things as well.
Asking about sort of how we're seeing things I guess theres a couple of elements to this one is as we look at new portfolios.
We're aware of sort of what we're facing into and consequently, James about risk adjusted return expectations, we're allowing for that as we look at new portfolios to ensure we're making a lot.
Now for the future.
Existing customer bases Ashish mentioned, what we're seeing right now is our existing customers who are making regular payments continue to perform as they have done in the past and we haven't seen any real impact of that.
Where we probably had started to see an impact of how consumers are feeling about the world. We're in is small portion of that cash comes in sort of what customers want to make a onetime payment to pay off that debt.
Well I think what we're seeing at the moment as some of those consumers are probably preferring to just sit on that cash because of the uncertainty they face against it.
Now our underlying cash collections as I've said continues to be robust.
But some of those consumers are just wanting to see where things are going right now and as we work with those consumers we want to ensure whatever they pay is affordable.
So thats, probably what impacts that we're taking a look at and monitoring hasn't had a material impact on our overall operations right now, but we are looking at that and that's part of what we reassess every quarter when we take a view of what we think the future looks like.
Got it.
Sure.
Thanks, a lot.
Maybe just to jump on the <unk>.
Changing to accomplish the 30 minute could you.
Explain.
How much influence because the FX have on that because obviously it changes.
The.
Yeah.
See it et cetera, et cetera, and do you get a double hit that win.
Effects works against you obviously are cash collections come in at a little lower but then also they come in below the curve until you kind of get double hit by FX. In some cases is that is that the case.
Well thanks for the question Robert.
As we pointed out when we do we do share metrics as an example of how.
We are performing relative to the curves that we established at the beginning of the year.
So if youre looking at if you're looking at comparing to the beginning of the year there is.
And impact for FX in other words, you FX are set.
Initially and then you have whatever it is you collect and then you convert to U S. Dollar as you've you're converting a different rate it'll be different right, but in terms of these calculations. If you just within a quarter.
I wouldn't say within the quarter, but the curves are are in local currency. So.
You're a year when you look at it over time.
As I said, if you take us.
When we look at our curves to the curve.
Entirety of the year.
And as I walked through.
In that example, FX does hurt you right because youre collecting in local currency, but then youre collecting fewer American dollars alright.
Yeah, Yeah, yeah understood understood I appreciate it thank you.
Yes.
Yes.
Alright, thank you.
I would now like to turn it back to Ashish Masih for closing remarks.
As we close the call today I'd like to reiterate a couple of key points.
Our strategy of focusing on the right markets employing disciplined and are purchasing approach.
Executing effectively and maintaining a strong balance sheet are key drivers of our performance.
And have put us in a position of strength as portfolio supply in the U S is now growing.
This is the portion of the credit cycle, we have been anticipating and we are ready for it.
Also as committed as ever to the essential role we play in the credit ecosystem and to help consumers regain their financial freedom. Thanks.
Thanks for taking the time to join US and we look forward to providing our fourth quarter results in February .
Alright.
Sure.
Thanks.
The program you may now disconnect.