There are definitely risks, and they're not small. Provisioning is not as transparent as one would like, and as was pointed out to me, the loans in arrears are much higher than one would like. In fact, provisioning is less than the loans in arrears for 6months+.
It's for this reason my position remains small.
When the chairman forks out $1.1m for on market purchases, it does suggest to me that their loan book is not showing the sort of stress that would impact earnings, at least not at this point (that's not enough of a reason to purchase, but it's one indicator).
It's likely, if not certain, that at some point these loans will have a higher proportion of bad debt. The question is when, by how much, and what's the impact to the company?
MNY Price at posting:
$1.25 Sentiment: Buy Disclosure: Held
