DGAP-News: 4finance S.A. / Key word(s): Quarter Results

23.05.2022 / 13:49
The issuer is solely responsible for the content of this announcement.


Strong start to 2022 delivering net profit of €13.3 million and Adjusted EBITDA of €33.5 million

Growth in online and banking businesses with focus on profitable products

Recent change in business footprint with sale of Polish business and Philippines acquisition

23 May 2022. 4finance Holding S.A. (the ‘Group’ or ‘4finance’), one of Europe’s largest digital consumer lending groups, today announces unaudited consolidated results for the three months ending 31 March 2022 (the ‘Period’).

Operational Highlights

- Customer repayment dynamics remained robust, with fundamental asset quality metrics stable across the business.

- Online loan issuance volume of €209.2 million in Q1 2022, up 10% year-on-year. Demand for credit remains strong, with issuance driven by continued strong performance in Poland and Spain.

- Near-prime portfolio development aligned with ability to fund those loans via TBI Bank. So far in 2022, over €9.0 million of Lithuanian near-prime loan principal was sold to TBI Bank.

- TBI Bank loan issuance volume during the Period grew by 35% year-on-year to €148.3 million from €109.6 million in the prior year period, with increased issuance in all products.

Financial Highlights

- Interest income of €80.9 million in the Period, up 17% from €69.4 million in the prior year period. Interest income from continuing products has grown every quarter since Covid impact in Q2 2020.

- The cost to income ratio for Q1 2022 improved significantly at 50.3% vs 58.9% in Q1 2021. Cost discipline and operational efficiency remain a focus both in the online business and TBI. Continued savings in online cost base with €2.3 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, with net impairment charges at €15.3 million, lower vs Q3 and Q4 2021 despite higher income and net receivables. Cost of risk at 8.0% in line with 7.6% in the prior year period as a result of disciplined lending and an active NPL debt sales market.

- Adjusted EBITDA was €33.5 million for the Period, up 34% year-on-year, delivering a record 41% annual adjusted EBITDA margin vs 36% in the prior year period. The full interest coverage ratio as of the date of this report, including proforma effect of acquisitions and disposals, is 2.5x.

- Post-provision operating profit for the Period was €23.8 million, benefiting from the 17% year-on-year increase in interest income and lower interest expense, with profit before tax of €18.8 million, nearly double that of Q1 2021.

- Net receivables totaled €691.5 million as of 31 March 2022, up 5.1% year-to-date. During the quarter, TBI Bank grew net receivables another 8% and online business portfolio was fairly stable.

- Improved overall gross NPL ratio at 10.2% as of 31 March 2022 (11.1% for online), compared with 11.3% as of 31 December 2021 (12.7% for online). TBI NPL ratio has improved at 9.8% as of 31 March 2022, compared with 10.7% as of 31 December 2021.

Liquidity and funding

- Strong liquidity position, with €68.3 million of cash in the online business at the end of the Period.

- Further deleveraging during Q1 with a further EUR 28.1 million notional of bonds repurchased.

- Strong capital position at TBI Bank (21.4% capital adequacy ratio) despite continued growth in risk weighted assets.

Kieran Donnelly, CEO of 4finance, commented:

“We made a strong start to the year with growth across our online and banking businesses. Demand for our online business is up 10% year-on-year, while TBI Bank saw its issuance grow by 35% over the same period. Good fundamental asset quality indicators and ongoing cost discipline combined with growth in interest income to deliver a net profit for the quarter of €13.3 million.

“In recent weeks the group’s business footprint has shifted: the unplanned sale of the our Polish operation to local management balanced by TBI Bank’s expansion into Greece and the acquisition in the Philippines. We hope the fast growing opportunity in the Philippines and the underserved Greek market will support the restoration of our geographic diversity and income generation as we move forward.”


Contact:   James Etherington, Group Chief Financial Officer
Email:   james.etherington@4finance.com / investorrelations@4finance.com
Website:   www.4finance.com

Conference call

A conference call with management to discuss these results is scheduled for Tuesday, 24 May at 15:00 UK time. To register, please visit www.4finance.com.

The conference call will be recorded for transcription and reference purposes. For those participating in the Q&A session, please note that name and institution details provided in the call registration process may appear in the transcript of the conference call that will be made available at www.4finance.com.

About 4finance

Established in 2008, 4finance is one of Europe’s largest digital consumer lending groups with operations in 10 countries.

Leveraging a high degree of automation and data-driven insights across all aspects of the business, 4finance has grown rapidly, issuing over €9 billion since inception in single payment loans, instalment loans and lines of credit.

4finance operates a portfolio of market leading brands, through which, as a responsible lender, the firm offers simple, convenient and transparent products to millions of customers who are typically underserved by conventional providers.

4finance has group offices in Riga (Latvia), London and Luxembourg, and currently operates in 10 countries globally. The Group also offers deposits, in addition to consumer and SME loans through its TBI Bank subsidiary, an EU licensed institution with operations primarily in Bulgaria, Romania and Greece.

Forward looking statements

Certain statements in this document are “forward-looking statements”. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements.


Some numerical figures included in this report have been subject to rounding adjustments. Accordingly, numerical figures shown for the same category presented in different tables may vary slightly, and numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

Inside information

This announcement contains inside information as stipulated under the Market Abuse Regulation.
Key Financial Ratios

  Three months ending 31 March 2022   Three months ending 31 March 2021   Year Ended 31 December 2021   Year Ended 31 December 2020
Net receivables (€m) (1) 691.5   533.1   658.1   526.4
Total assets (€m) 1,070.5   1,017.6   1,058.1   949.7
Total equity (€m) 186.9   154.9   176.8   150.0
Equity / assets 17.5 %   15.2 %   16.7 %   15.8 %
Tangible common equity / tangible assets (2) 14.2 %   11.5 %   13.5 %   11.6 %
Equity / net receivables (3) 27.0 %   29.1 %   26.9 %   28.5 %
Adjusted interest coverage (4) 2.5x   1.9x   2.6x   1.8x
TBI Bank consolidated capital adequacy (5) 21.4 %   19.0 %   22.9 %   19.4 %
Net interest margin: (6)              
- Online 74.5 %   62.5 %   65.7 %   60.3 %
- TBI Bank 22.6 %   23.8 %   22.9 %   24.0 %
- Overall group 37.9 %   37.4 %   37.1 %   39.7 %
Cost / income ratio (7) 50.3 %   58.9 %   55.0 %   56.9 %
Post-provision operating profit margin (8) 29.4 %   19.6 %   21.1 %   7.0 %
Normalised Profit before tax margin (9) 27.1 %   17.0 %   18.6 %   2.2 %
Normalised Return on average equity (10) 36.0 %   20.0 %   21.4 %   (10.1) %
Normalised Return on average assets (11) 6.2 %   3.1 %   3.5 %   (1.7) %
Asset quality              
Cost of risk: (12)              
- Online 16.4 %   13.2 %   15.4 %   24.2 %
- TBI Bank 4.3 %   4.4 %   5.7 %   6.1 %
- Overall group 8.0 %   7.6 %   9.0 %   14.2 %
Net impairment / interest income (13) 18.9 %   17.5 %   21.2 %   31.7 %
Gross NPL ratio: (14)              
- Online 11.1 %   16.7 %   12.7 %   19.2 %
- TBI Bank 9.8 %   14.0 %   10.7 %   15.7 %
- Overall group 10.2 %   14.9 %   11.3 %   17.0 %
Overall group NPL coverage ratio(15) 114.1 %   106.9 %   108.9 %   106.0 %
Loan loss reserve / gross receivables, % 11.6 %   15.9 %   12.3 %   18.1 %

Definitions and Notes below. For further definitions please see the appendix. For quarterly asset quality ratios please see page 18.
Normalised ratios are adjusted to remove the effect of non-recurring items, net FX and one-off adjustments to intangible assets.

(1) Gross receivables (including accrued interest) less impairment provisions

(2) Tangible equity is Total Equity less Intangible Assets. Tangible Assets are Total Assets less Intangible Assets

(3) Total equity / net customer receivables (including accrued interest)

(4) Adjusted EBITDA / interest expense for the relevant period (n.b. not equal to the full covenant coverage ratio calculation)

(5) TBI Bank (Tier One Capital + Tier Two Capital) / Risk weighted assets (calculated according to the prevailing regulations of the BNB)

(6) Annualised net interest income / average gross loan principal

(7) Operating costs / operating income (revenue)

(8) Post-provision operating profit (which does not include non-recurring items, net FX and D&A) / interest income

(9) Profit before tax / interest income

(10) Annualised profit from continuing operations / average equity (total equity as of the start and end of each period divided by two)

(11) Annualised profit from continuing operations / average assets (total assets as of the start and end of each period divided by two)

(12) Annualised net impairment charges / average gross receivables (total gross receivables as of the start and end of each period divided by two)

(13) Net impairment charges on loans and receivables / interest income

(14) Non-performing receivables (including accrued interest) with a delay of over 90 days / gross receivables (including accrued interest)

(15) Overall receivables allowance account / non-performing receivables

23.05.2022 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
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Language: English
Company: 4finance S.A.
8-10 Avenue de la Gare
1610 Luxembourg
Grand Duchy of Luxembourg
E-mail: info@4finance.com
ISIN: XS1417876163, SE0006594412, XS1092320099, XS1094137806,
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Stuttgart, Tradegate Exchange; Dublin
EQS News ID: 1359061

End of News DGAP News Service

1359061  23.05.2022