Both Encore Capital Group and Portfolio Recovery Associates reported higher profits in the third quarter, compared with the same quarter last year, a positive sign for all companies in the credit and collection industry.
Encore Capital reported net income of $38.8 million for the three-month period ending Sept. 30, compared with $20.7 million during the same period of 2018. PRA Group, meanwhile, reported net income of $25 million, up from $9.9 million during the third quarter of last year.
PRA Group saw a significant jump in the amount collected through its legal channel. Having referenced investments it has made in its legal collections operation for some time, the company reported a 35% increase in legal collections compared with the same quarter last year. The company also cited an increase of 9% in its call center collections despite a 28% reduction in headcount. The bump in productivity despite a reduction in headcount is thanks to improved technology investments, company executives said on a conference call with analysts yesterday.
“Those have been around a long time, one of the things that you might recall is that during 2015, 2016, reduced headcount, probably the wrong time, and we talked a lot about that in our journey to rebuild,” PRA CEO Kevin Stevenson said during the call. “And so what I’ll just tell you here is that, you know, we’ve got our eyes on that. We’re not going to make that mistake again. And these headcounts reductions are much to what Peter said, as well as matching to our current inventory that we’re purchasing.”
Encore also cited improved call center metrics in its earnings call with analysts. Speaking about Midland Credit Management, a unit of Encore, Ashish Masih, Encore’s CEO said, “Our improvement in collections efficiency is particularly evident in our MCM business where we have grown collections while improving cost to collect. Since 2017, MCM collections have grown more than 17% while MCMs cost to collect has improved by a full 360 basis points.”