Curo Group (ticker: CURO) announced a strong first quarter after the close. Revenue of $290MM was up 48% and beat analyst estimates of $274MM. Adjusted earnings of $.15 also beat expectations by $.03. Like Enova International (ticker: ENVA), Curo is regrowing the loan book after a lack of economic activity caused by Covid shutdowns reduced loan demand in 2020 and into 2021. We find it encouraging that the company grew the loan book by 60% (backing out acquired growth which more than doubled the size of the portfolio). Curo also managed to reduce net charge-off rates while growing the loan book. That’s because the company made the decision to focus on loan quality at the expense of higher interest rates.
We’ve done a number of industry calls recently on competitor, Enova International where some have previously expressed concern that high levels of loan growth could potentially be masking a decrease in loan quality. That didn’t happen at CURO, and both of these companies make relatively short-term loans. While charge-offs will increase from pandemic lows, we believe that if there were a problem with the new business, it would have shown up in the numbers by now. We’ll find out after the close tomorrow when ENVA reports results.