Consumers Still in Good Position to Pay Debts: Encore CEO

Inflation and rising gas prices have not yet started to impact consumers’ ability to pay their debts, and overall consumer strength is continuing, but maybe not at the levels seen during the pandemic, the chief executive of Encore Capital Group said last week during a conference call with analysts to discuss the company’s first quarter financial performance.

Overall, the company, one of the major debt buyers across the globe, reported net income of $175 million during the first three months of 2022, up from $94 million during the same period a year ago. The company collected $519 million during the first three months, generating revenue of $499 million, compared with $606 million in collections and $416 million of revenue during the same period last year. Encore spent $169 million buying portfolios of debt, compared with $170 million during the first three months of 2021.

During the call with analysts, Encore CEO Ashish Masih cited the strong collections recorded during the quarter, and was asked to what he attributed the robust figures.

“Consumers continue to perform kind of pretty well,” Masih said, according to a transcript of the call. “I would attribute it to two things, right, consumer strength is continuing, although probably not at the level as last year, but also our operations and our strategies, how we work with them to set up a payment that works, how we deal with them, how easy we make it for them to interact with us, whether it’s through call center or digital means. So, I think that’s a bigger part — a big part of it as well. That said, consumer strength continues, even though they are borrowing more, they are spending a lot more. Purchasing volumes are up and as I look at some bank reports, just anecdotal reading through some of them very quickly, payment rates continue to be pretty strong as well.”

When asked a follow-up question about any impact of rising gas prices or inflation on collection levels, Masih said they “have not seen any impact” of that on their collection efforts in the United States and the United Kingdom.

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