Latitude shares plunge as it reveals hit from cyberattack

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Consumer finance business Latitude Group is likely to scrap its first-half dividend and report a loss of up to $105 million as a result of a crippling cyberattack that compromised the personal information of 7.9 million people.

Shares in Latitude dropped 7 per cent on Friday morning to $1.20, after it revealed the financial hit it would take from a March cyberattack, which exposed personal details of customers sourced from retailers such as Harvey Norman, JB Hi-Fi, Coles and Apple.

Latitude says it is unlikely to pay a first-half dividend.Credit: AFR

In a sign of the attack’s broad impact across the company, a lender to consumers, Latitude said it had been forced to stop or severely restrict the opening of new accounts for about five weeks. The company was also unable to contact customers who had not paid their bills during this period because key systems were shut down.

While regular commercial operations have been restored, Latitude said it would make less income and it would also take higher provisions for bad debts, because the shutdown in its collections area had worsened a trend towards rising loss ratios.

The company also flagged a $46 million after-tax provision, mainly to cover the customer remediation costs, such as the cost to customers of replacing their drivers licenses. This provision does not include any possible costs the company could face from class actions, fines, or future upgrades to its systems.

All up, the company forecast a first-half statutory loss of $95 million to $105 million, and it also expected a statutory loss over the full years.

“Due to the forecast statutory after-tax loss, it is unlikely that Latitude will declare a dividend for the six months to 30 June 2023,” the company said.

It said cash net profit after tax – a less volatile measure – would be $5 million to $10 million in the first half.

The cyberattack on Latitude resulted in hackers gaining access to the driver licence numbers of about 7.9 million people who were customers, past customers or had applied to be customers of Latitude.

The company said hackers – who had successfully demanded a ransom payment – had also gained access to personal details such as people’s names, addresses, telephone numbers and dates of birth.

The mass breach has sparked a landmark investigation by the Australian and New Zealand privacy commissioners, which will look at whether the company took reasonable steps to protect the personal information it held. Class action law firms are also mulling potential legal action against Latitude.

Latitude said its response to the attack included taking its information platforms offline; resetting passwords across the group; contacting all affected customers; working with Australian authorities and bringing in external cyber experts to work alongside its own teams. It said there had been no suspicious activity on its systems since March 16.

Separately, shares in consumer finance group Humm were also down 7 per cent to 40c on Friday, after it said the corporate cop made an interim order that stops Humm from signing up new buy now, pay later customers until its concerns are addressed.

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