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4finance reports results for the nine months ending 30 September 2017

21 November 2017. 4finance Holding S.A. (the ‘Group’ or ‘4finance’), Europe’s largest online and mobile consumer lending group, today announces unaudited consolidated results for the nine months ending 30 September 2017 (the ‘Period’).

Financial Highlights

  • Interest income up 14% year-on-year to €327.2 million in the Period compared with €287.3 million in the prior year period.
  • Operating income up 10% year-on-year to €296.1 million in the Period, reflecting higher interest expense.
  • Online loan issuance during the Period grew by 11% year-on-year to €934.9 million from €840.7 million in 9M 2016.
  • Net receivables reached €555.8 million as of 30 September 2017, up 13% year to date.
  • Adjusted EBITDA was €107.1 million for the Period, up 5% year-on-year, with adjusted interest coverage of 2.4x.
  • Profit before tax for the Period was €49.5 million, decreasing 21% year-on-year from €62.6 million in 9M 2016.
  • Cost to income ratio for the Period, using the standard definition of operating income, was 58%, vs. 50% for 9M 2016, reflecting staff cost growth and increased investment during 2016 and acquisitions in the latter half of 2016. The quarterly cost to income ratio for Q3 2017 was 55%, improving from 60% in Q2 2017.
  • Financial strength remains solid, with equity to assets ratio of 24% as of 30 September 2017 and equity / net receivables of 47% following the ordinary dividend payment of €10 million in July.
  • Improvement in asset quality, with an overall gross NPL ratio of 28.5% as of 30 September 2017 (36.9% for online) compared with 33.1% as of 31 December 2017 (42.0% for online). The cost of risk for the online business was 18.9% for the Period, similar to 19.3% in the prior year period, following an increase in net impairments in Q3 2017.

Operational Highlights

  • The number of registered online lending customers reached 7.4 million as of 30 September 2017, up 29% from a year ago. TBI Bank has 1.4 million registered banking customers.
  • Strong instalment loan origination in the third quarter, with issuance up 35% on Q2, and launch in Georgia in October.
  • A pilot transfer of Swedish instalment loans to TBI Bank completed, benefiting from lower funding cost.
  • Latin American growth continues, with loan issuance up 47% quarter on quarter, and new distribution partnership established in Mexico.
  • Growth in existing near-prime products such as in Lithuania with new product development and partnership projects underway in other markets including Sweden and Poland.
  • Regional managers added to executive committee to bring operational country level experience and accountability closer to strategic decision making. Appointment of Mikah Martin-Cruz as Chief Marketing Officer and Andrew Zeller as VP of Business Development and Strategic Alliances.
  • Lado Gurgenidze appointed as Chairman of the Supervisory Board and new board committees established, further strengthening our corporate governance.

Mark Ruddock, CEO of 4finance, commented:

“These results evidence our focus on returning to profitable growth, with third quarter loan issuance up 7% from Q2, the highest organic quarterly growth in two years. With interest income growth of 14% year-on-year and profit before tax of €49.5 million for 9M 2017, our year to date performance remains solid. The significant quarterly reduction in the cost to income ratio demonstrates our drive to optimize performance.

“Within our existing products, the two key growth areas of instalment loans and the LatAm region had strong originations with quarter-on-quarter issuance up 35% and 47%, respectively. We have also made good progress in developing our near-prime offering in Scandinavia and on establishing partnerships to accelerate time to market in other countries.

“We have strengthened our executive committee, adding our regional and bank leaders, enabling us to leverage direct experience from the field and streamline our decision making. We also welcome Mikah Martin-Cruz as CMO to help optimize marketing execution and brand development, as we establish ourselves as the company that unlocks access to financial products and services for the underserved. Joining Mikah on EXCO will be Andrew Zeller, who will be heading up Business Development and Strategic Alliances.”

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