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4finance Holding S.A. reports results for the three months ending 31 March 2023

  • Net profit of €5.6 million and Adjusted EBITDA of €28.0 million
  • Strong start to the year at TBI Bank

Operational Highlights

  • Online loan issuance volume of €137.0 million in the Period compared with €92.6 million in Q1 2022 and maintaining volumes from Q4. Demand for credit remains strong in most markets, with yearly issuance growth driven by Czech Republic, Latvia, Sweden and Philippines.
  • Near-prime portfolio development aligned with ability to sell those loans to TBI Bank. Over €12 million of Lithuanian near-prime loan principal was sold to TBI Bank from January to April 2023.
  • TBI Bank loan issuance volume during the Period grew by 39% year-on-year to €206.4 million from €148.3 million in the prior year period, with increased issuance in all products.

Financial Highlights

  • Interest income from continuing operations up 39% year-on-year to €91.7 million in the Period compared with €65.8 million in the prior year period. For the prior period figures, the Polish business is reflected separately in the income statement as a 'discontinued operation'.
  • Cost to income ratio for Q1 2023 was 46.0%, a significant improvement from 53.9% in Q1 2022 (excluding Poland and Philippines), despite the increase in total operating costs year-on-year.
  • Adjusted EBITDA was €28.0 million for the Period, up 8% year-on-year (compared to the proforma EBITDA excluding Poland and including Philippines) delivering a 31% adjusted EBITDA margin. The interest coverage ratio as of the date of this report, including proforma effect of acquisitions and disposals, is 2.4x.
  • Post-provision operating profit from continuing operations for the Period was €13.6 million, benefiting from the 40% year-on-year increase in operating income (revenue), with profit after tax of €5.6 million.
  • Fundamental asset quality indicators at product level remain broadly stable. Net impairment charges of €33.5 million reflect the larger portfolio, different product mix in online and reduced debt sales activity. Cost of risk at 13.7% vs 8.7% in the prior year period.
  • Net receivables totaled €906.2 million as of 31 March 2023, up 7% from 31 December 2022, with growth in online and TBI Bank.
  • Overall gross NPL ratio at 9.8% as of 31 March 2023 (10.0% for online), compared with 8.8% as of 31 December 2022 (9.0% for online). TBI NPL ratio has increased to 9.8% as of 31 March 2023, compared with 8.7% as of 31 December 2022.

Liquidity and funding

  • Strong liquidity position, with €44.0 million of cash in the online business at the end of the Period.
  • Cash flows relating to last year's acquisitions and disposals occurred in April 2023 as expected (received €6 million Poland first instalment payment, made €8 million Philippines earn-out payment).
  • Solid capital position at TBI Bank (23.3% capital adequacy ratio) despite continued growth in risk weighted assets with additional net €5 million of MREL eligible instruments issued in Q1.

Kieran Donnelly, CEO of 4finance, commented:

“4finance continues to demonstrate its resilience, with revenue up and an improvement in cost to income ratio from 53.9% in Q1 2022 to 46.0% in Q1 2023, in spite of the economic uncertainties associated with the war on Ukraine.

“The volume of online loans issued is up significantly to €137 million in the period from €92.6 million in the prior year period. TBI Bank is making a strong contribution with loan issuance growing by 39% year-on-year.

“Through international expansion, partnership and acquisition we are enjoying growth in Greece, the UK and the Philippines. We have strong liquidity in our online business and TBI Bank remains well capitalised.”

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