Interview with StockPal

Jared: Welcome viewers to Q&A with StockPal, today we have the Managing Director of Pioneer Credit, Keith John, with us. Hey, Keith, how are you doing today?

Keith: Very well, thanks Jared. Thank you for having me.

Jared: The pleasure is ours. Perhaps you could tell the viewers what the whole Pioneer Credit all about?

Keith: Thank you. Yes, look, Pioneer Credit is an ASX listed Australian financial services firm. What we do is we buy impaired credit predominantly off the banks, and we seek to rehabilitate those consumers over time. And currently we're the second largest purchaser in the Australian market. We've invested about half a billion dollars over the last 10 years, most of it in the last five or six. And we currently have a portfolio of about 2.5 billion dollars Australian that is owed to us.

Jared: Right. And just to give the viewers a heads up, how did the company cope during this COVID-19 pandemic?

Keith: Yes, look, it was a really interesting period obviously for everyone. In terms of our business, because of our credit quality or the underlying credit quality of our book, which is out of the big banks only in Australia, our book performed remarkably well. We had a drop off in parts of our performing book through April, by June that had recovered completely and was back on track performing. What we have noticed is some of our customers are paying less than they used to pay before, but, more than anything we are actually finding more customers wanting to pay down their debt now as well. So our company has performed very well and certainly for the half our revenue was flat on the previous half, but that was after we had significantly less purchasing we'd had in the year before. If you think about purchasing in our business, that's like buying stock, like you might stock a shelf in a supermarket, so we had less stock on the shelves, but we had the same sort of revenue flowing through. So really good performance in terms of the operating environment for us.

Jared: Right. And here comes the million dollar question, how does the company actually make money?

Keith: For sure. Look, the company makes money, in a sense, in two ways. The first way is through buying its assets well. Making sure that when we buy our credit, which is impaired credit from within the bank, so generally 180 day past due credit cards and personal loans, that we don't overpay for it. That requires deep analytics and years and years of experience, both of which we have.

The second way is through the recovery of that money over time from our consumer base. But very different to how these businesses have operated in the past, the Pioneer business is focused on servicing customers well and delivering them a great financial outcome. What that means, Jared, is that we're working with customers to help them get back on their feet, pay the money back in a sustainable way. Our business is not about squeezing, it's about encouraging and about selling the right solution to them for the customer.

And if we look after the customer and love the customer, they will reward us, and of course they will get a great customer experience as well. And the way we evidence that is through our net promoter score. We measure the likelihood of referral. It's quite an unusual thing to measure in a business like ours and remarkably it's well into the double digits on the positive side. Really, really positive outcome for the consumers that we buy over time.

Jared: And speaking of customers, who are your target customers like?

Keith: For sure. So our customer in the sense of how we acquire customer portfolios are the major banks in Australia. For Pioneer that are the four major banks and then the subset that sits underneath them. What we don't do is acquire payday loans or what we call small account credit contracts. That's not where we live and not where we are able to add value. And then on the other side, our real customers, the people that actually keep our doors open and make us successful, the people that are in our portfolios that we are working with to pay back their loans. And of those, at the moment of that two and a half billion dollar portfolio, we have about 370 million Australian dollars on a performing arrangement, like a performing loan book for lack of a better description. And we're working with those customers to increase that pool and to support them over time to get back on their feet.

Jared: And what would you say is Pioneer Credits competitive advantage?

Keith: Look, it's really, really important and something that's become much more important post the Hayne Royal Commission into banking in Australia. Our business is all about looking after consumers, doing the right thing in an environment that protects them and ensures good outcomes, so part of our advantages in our servicing platform, the way that we help people. For example, our people that speak to you on the phone or might speak to a customer on the phone, don't use call scripts. They're there to solve problems and have a very human conversation and make a human connection to our customer and resolve their issues, so that's one part of the competitive advantage. In Australia that plays very heavily into who banks choose to deal with. They need to deal with good, compliant front of house, front service operators and Pioneer's one of the very best in the market at that.

Jared: And just to wrap up the Q&A, what would you say is Pioneer Credit's effort to keep up with the investors currently?

Keith: At the moment we are certainly talking to people like StockPal and we really appreciate your interest. We've got a range of work that's about to commence now to promote the company and start telling our story across Australia and through Asia, including with analyst coverage that we expect very soon. Certainly to your viewers if there are any questions we're more than happy to answer them and certainly engage. We respect our shareholders money greatly. I'm the single largest shareholder in the company and understand what it means when people trust their capital with you. We very much appreciate our shareholders and respect their capital and we're there for them just like they're there for us.

Jared: And for viewers more keen on the Pioneer Credit story, the ticker is ASX:PNC, and thanks again, Keith, for being with us today.

Keith: It's a real pleasure. Thank you, Jared.