Q2 Profit Impacted by Fraud: Despite a 48 per cent growth in its loan portfolio to $4.5 billion and 34 per cent revenue increase to nearly $1 billion, Dolla’s profits were hurt by external fraud affecting about three to four per cent of the loan book, resulting in higher loan provisions and write-offs.

Strengthened Controls and recovery efforts: The company has conducted a full portfolio review, enhanced internal controls, updated credit risk models, and is actively pursuing recovery of written-off loans to mitigate future fraud risks.

Plans for capital raising and growth: Dolla plans a public offering by year end to address undercapitalisation, prioritising reinvestment in the business to restore dividend payments and return to normalised profitability in the second half of 2025.

DOLLA Financial Services Limited has reported that external fraudulent activities dented its second-quarter performance, eroding profits despite continued growth in its loan portfolio and revenues.

The company ended the quarter with its loan portfolio up 48 per cent year over year to $4.5 billion, driven organically, while revenues climbed 34 per cent to just under $1 billion. However, higher loan provisions and write-offs of bad debt weighed on earnings. Net profit year to date fell to $247.8 million from $284 million in 2024, while its profit before tax declined 17 per cent to $252 million.

“These really stemmed from some external fraudulent activities that involve our loan collateral, and this issue would have affected a small portion of our portfolio,” Chief Executive Officer Kenroy Kerr said during the company’s recent second-quarter earnings call hosted by Investor Relations Curated on
YouTube.

Kerr declined to share further details, citing ongoing investigations, but assured shareholders that the company acted swiftly. Dolla conducted a full review of its portfolio, carried out a root cause analysis, and has strengthened internal controls and updated credit models to reduce future risks.

“We have tested these controls and we’re confident that these are working effectively — and most importantly, we are now actively pursuing the recovery of the written-off loans. Every single dollar that we recoup will go directly to the bottom line and straight to our profit,” Kerr added.

The fraudulent activities, which occurred in March and June of this year, affected about 3.5 per cent of the company’s loan portfolio and prompted significant adjustments to its loan products and risk models.

Business loans account for 93 per cent of Dolla’s portfolio, with 83 per cent of loans now adequately secured. The trucking, haulage and transportation sector makes up 42 per cent of the loan book, while real estate and construction represent 26 per cent. Kerr acknowledged that fraud-related provisions and write-offs had dampened results. Still, he noted that the income of $994 million, up 34 per cent year over year, was encouraging. Without the impact of the fraud, he said, profit before tax for the first half of the year would have seen at least a 25 per cent increase over the prior year.

“It’s happening a lot in the financial sector but we are doing what we can to ensure that this is contained, and we are limiting the reoccurrence of these issues,” Chief Financial and Risk Officer Trevene McKenzie told investors.

Looking ahead, McKenzie confirmed that the company is not sufficiently capitalised and is preparing to raise funds through another public offering by the end of the year, though no specific dates were disclosed. She also addressed shareholder concerns about reinvestment and dividend payments, noting that the company’s priority is to allocate capital toward long-term growth.

“The aim is to get back to dividend payments but we have some work to do in terms of reinvesting in the business so we can get there,” McKenzie said.

Dolla Financial anticipates a return to normalised profitability and renewed growth in the second half of the financial year as its corrective measures and portfolio improvements take hold.

KERR…we have tested these controls and we’re confident that these are working effectively — and most importantly, we are now actively pursuing the recovery of the written-off loans. Every single dollar that we recoup will go directly to the bottom line and straight to our profit.