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.
Market Conditions and Portfolio Strategy
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.
Financial Metrics and Funding
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 2023, while adjusted EBITDA has risen 35% over the same period. Cash efficiency improved by more than 200 basis points despite increased court costs associated with legal collections.
Sehgal said leverage has declined for seven consecutive quarters, falling from 2.9 times in the third quarter of 2024 to approximately 2.7 times as of the second quarter. The company is targeting leverage in the mid-2-times range over the longer term.
PRA funds operations through bank debt, bonds and a small European deposit base. Sehgal said the company has relationships with more than 15 banks, more than $3 billion of committed bank capital, approximately $1 billion of liquidity and no debt maturities until 2028. During the second quarter, the company refinanced a $730 million European credit facility.
Cost Actions, Technology and Capital Allocation
Under its “PRA 3.0” strategy, the company is emphasizing disciplined portfolio purchases based on net returns, operating efficiency, technology modernization and organizational changes. Sjolund said PRA has eliminated more than 200 corporate and overhead positions and 575 call-center roles, actions expected to generate $35 million in annualized net savings.
The company has closed two U.S. call centers and one offshore site, reducing its U.S. site footprint from seven locations to one while shifting more calling activity offshore. PRA also launched a global omnichannel customer-contact platform and opened a talent hub in Charlotte, North Carolina, to access technology and analytics talent.
Sjolund said artificial intelligence could improve underwriting, document processing and collection efficiency, given the company’s data on approximately 50 million U.S. customer accounts, billions of documents and call transcripts. He added that AI could also enable lenders to improve their own collection processes, potentially affecting supply over time.
Sehgal said PRA’s capital allocation priorities are disciplined portfolio buying, investment in legal and digital channels and technology modernization, followed by opportunistic share repurchases. Since the second quarter of 2025, the company has repurchased $40 million of stock, and its board recently increased the share repurchase authorization to $150 million.
About PRA Group (NASDAQ:PRAA)
PRA Group, Inc is a global specialty finance company focused on the acquisition and management of nonperforming loans. Founded in 1996 as Portfolio Recovery Associates, the company purchases defaulted consumer and commercial receivables at discounted rates from financial institutions, utilities and other creditors. By combining rigorous analytics with a consumer-centric ethos, PRA Group seeks to maximize recoveries while maintaining respectful and compliant interactions with debtors.
The company’s core activities include first-party and third-party collections across a range of asset classes such as credit cards, auto loans and utility receivables.
