PRA Group Highlights Portfolio Growth, Cost Cuts and AI Push at IDEAS Conference

PRA Group is expanding its nonperforming-loan portfolio strategy through geographic diversification across 18 markets and cautious purchases from fintech and other nontraditional lenders. The company reported $8.9 billion in estimated remaining collections and a more than $349 million write-up of its European portfolio. Financial performance and balance-sheet metrics improved, with cash collections up 32% and adjusted EBITDA up 35% since 2023. Leverage has declined for seven consecutive quarters to about 2.7 times, while PRA has approximately $1 billion in liquidity and no debt maturities until 2028. Under its “PRA 3.0” plan, PRA has eliminated more than 775 corporate, overhead and call-center positions, targeting $35 million in annualized savings. It is also investing in omnichannel technology and AI for underwriting, document processing and collections, while authorizing up to $150 million in share repurchases. PRA Group NASDAQ: PRAA outlined its strategy for expanding returns from purchased nonperforming loan portfolios, highlighting a diversified international footprint, continued cost reductions and investments in technology during the Midwest IDEAS Conference. Martin Sjolund, PRA Group’s president, described the company as a debt buyer that acquires nonperforming consumer loans from banks and works with customers to establish repayment plans. He said the company’s role is to return capital to lenders while helping consumers resolve debt, using data, technology and specialized collection capabilities to improve recoveries. “We do not actually put people into debt,” Sjolund said. “We try to get them out of debt” through payment arrangements and, where appropriate, legal collections. Sjolund said the U.S. remains the world’s largest market for nonperforming loans, supported by more than $1 trillion in outstanding credit card balances. Rising charge-off rates can create additional portfolio supply, although the company’s business is cyclical and economic weakness can also affect existing customers’ ability to pay. He said PRA Group has found customer payments and legal collections to be relatively resilient across economic cycles. The company operates in 18 markets, with the United States representing about 40% of estimated remaining collections, or ERC. Its geographic reach allows it to allocate capital among markets with differing supply and competitive conditions, according to Sjolund. In the U.S., the company primarily purchases credit card receivables and often enters forward-flow arrangements with sellers, agreeing to prices for specified account segments. Sjolund said PRA has also begun cautiously expanding into portfolios from fintechs and other nontraditional credit providers, initially making limited purchases to gather data and refine its underwriting models. European portfolios include a broader mix of unsecured consumer loans and generally carry higher face values, he said. PRA recently recorded a more than $349 million write-up of its European portfolio after a review following more than 20 consecutive quarters of collection overperformance. Sjolund said PRA invested $297 million in portfolios during the second quarter, collected $559 million and had ERC of $8.9 billion. The company reported second-quarter net income of $58 million, trailing adjusted EBITDA of $1.4 billion and net leverage of 2.67 times. Chief Financial Officer Rakesh Sehgal said portfolio purchases totaled a record $1.4 billion in 2024 and $1.2 billion in 2025, the company’s third-highest annual level. He said cash collections have increased 32% since ...