- Strong first half of 2022 delivering net profit of €26.1 million and Adjusted EBITDA of €64.5 million
- Organic loan issuance growth in both online and banking businesses
- Change in geographical footprint with sale of Polish business and Philippines acquisition
Operational Highlights
- Customer repayment dynamics remained robust, with fundamental asset quality metrics stable across the business.
- Online loan issuance volume of €359.3 million during the Period, lower than prior year, but up 24% in continuing products (excluding acquisitions and disposals).
- Near-prime portfolio development aligned with ability to fund those loans via TBI Bank. So far in 2022, over €17 million of Lithuanian near-prime loan principal was sold to TBI Bank.
- TBI Bank loan issuance volume during the Period grew by 37% year-on-year to €315.8 million from €230.2 million in the prior year period, with increased issuance in all products.
Financial Highlights
- Interest income of €160.0 million in the Period, up 15% from €138.8 million in the prior year period. Consistent growth in interest income from continuing products since Q2 2020 Covid impact. Strong contribution from Philippines and TBI brought Q2 interest income close to prior quarters despite the exit from Poland in mid April.
- The cost to income ratio for the Period improved significantly at 48.5% vs 59.1% in the prior year period. Cost discipline and operational efficiency remain a focus both in the online business and TBI. Continued savings in online cost base with €3 million total savings QoQ across most cost categories. Cost base at TBI grew to support higher issuance, and investment in ongoing initiatives.
- Good fundamental asset quality indicators at product level, with net impairment charges at €35.7 million, up 47% on the prior year on larger portfolio and different product mix in online. Cost of risk at 9.2% vs 7.4% in the prior year period.
- Adjusted EBITDA was €64.5 million for the Period, up 26% year-on-year, delivering 40% adjusted EBITDA margin for the period vs 37% in H1 2021. The interest coverage ratio as of the date of this report, including proforma effect of acquisitions and disposals, is 2.8x.
- Post-provision operating profit for the Period was €45.7 million, benefiting from the 15% year-on-year increase in interest income and lower interest expense, with profit after tax of €26.1 million, nearly double that of H1 2021.
- Net receivables totaled €706.7 million as of 30 June 2022, up 7% year-to-date. During the quarter, TBI Bank grew net receivables another 10% and the online business portfolio grew in the Baltics, Spain and Czech Republic.
- Improved overall gross NPL ratio at 9.6% as of 30 June 2022 (9.3% for online), compared with 11.3% as of 31 December 2021 (12.7% for online). TBI NPL ratio has improved at 9.7% as of 30 June 2022, compared with 10.7% as of 31 December 2021.
Liquidity and funding
- Further deleveraging with EUR 3 million notional of 2026 bonds repurchased in June and another EUR 2 million in July.
- Strong capital position at TBI Bank (22.1% capital adequacy ratio) despite continued growth in risk weighted assets.
- Dividend of €15.0 million paid in July in respect of the 2021 financial year, the first such payment since 2019.
- Healthy current cash levels with focus now on loan issuance and growth.
Kieran Donnelly, CEO of 4finance, commented:
“For this second quarter we see an ongoing and sustained improvement in income from continuing products that yielded €160 million in interest income for the first half, up 15% on the same period in 2021. Demand for our relevant and convenient credit products remains strong. TBI Bank continues to grow significantly, while investing in further growth opportunities. This progress is backed by improving the overall gross NPL ratio to 9.6%. Our Philippines business contributed to our results for the whole of the quarter and we are pleased with the dynamic growth from this market.”
