Financial Highlights
- Market conditions affected by COVID-19 related lockdowns and decreased loan demand
- Solid start into 2021 reaching an EBIT of
EUR 5.4 million ; credit losses remained well under control - Launch of SweepBank with continued strong increase in revenues: y-o-y +79.3%
Q1 2021 | Q1 2020 | |
Revenue | 51.9 | 65.6 |
Operating profit (EBIT) | 5.4 | -2.3 |
Profit before tax | 0.6 | -8.3 |
Earnings per share, basic (EUR) | -0.01 | -0.39 |
Earnings per share, diluted (EUR) | -0.01 | -0.39 |
Continued cautious underwriting approach in the
In Q1 2021 the Group’s financial performance and results remained affected by the COVID-19 pandemic. The company continued with its cautious sales and scoring approach in the
Improved impairments and profit before taxes at break-even
The Group’s revenues came in at
Operating profit (EBIT) for the first quarter of 2021 came in at
The y-o-y EBIT increase of
Financial costs (net) decreased from
Balance sheet ratios and financial metrics continued to remain strong
As at the end of Q1 2021, equity stood at
Total assets up by 13.7 %, driven by cash and accounts receivables
Total Assets increased from
At the end of Q12021, current assets stood at
Current liabilities increased by 28.3 % or by
At the end of Q1 2021, current and non-current deposits totaled to
At the end of Q1 2021, the Group had 683 employees, a decrease from Q1 2020 (771 employees). Personnel expenses were y-o-y down by 13.5% at
Rebranding of segments and tribes
The Group has during the first quarter rebranded its previous segments Microloan, PlusLoan, CreditLimit, CapitalBox and Mobile Wallet including Primeloan. The newly introduced segments and brands within the Group are called
The Group’s role remains as an enabler, or a platform, for the business units to flourish. Primelending and the Mobile Wallet business has now been rebranded SweepBank, a brand with a very clear customer focus and an ambition to make its clients’ lives easier. The brand Ferratum is reserved for the Near Prime lending business.
Brand | Products |
Microloan, PlusLoan and Credit Limit | |
CapitalBox | SME lending |
SweepBank | Primeloan and Mobile Wallet |
Matching share plan
The Group introduced during Q1 2021 a matching share plan for its employees. Under the program, employees have twice a year the opportunity to invest 5% of their annual salary in the Company’s shares. The shares will vest after a two-year holding period, after which the Company will match the shares at a 1:1 ratio. In the first trance, a total of 113 employees participated in the matching share plan with a total investment of EUR 262 560.
Risk management
The Group takes moderate and calculated risks in conducting its business. The prudent management of risks minimises the probability of unexpected losses and threats to the reputation of the Group. Therefore, it can enhance profitability and shareholder value.
The Board of Directors monitors operations regularly and is ultimately responsible for adequate risk management and ensuring that the Group has access to the appropriate software, including instructions on controlling and monitoring risks. The CEO of the Group is responsible for the daily operations. Each member of the Leadership Team ultimately bears responsibility for identifying and controlling the risks related to their functions in line with instructions from the Board.
The Group proactively follows all legal changes that might occur in the countries it operates in and adjusts its operations accordingly, while always considering customer and user experience.
The risks of the company operations can be divided into three main categories: credit risks (receivables from customers), market risks (including foreign exchange risks, interest rate risks and other price risks) and operational risks (such as IT risks, legal and regulatory risks and other operational risks).
Exposure to credit risks arises principally from the Group’s short-term lending activities. The risk is managed by proprietary risk management tools which assist subsidiaries in evaluating the payment behaviour of customers. These tools, which are continuously updated and refined, ensure that only solvent customers are accepted, thereby controlling the level of credit losses.
The scoring system and the credit policies of the Group’s subsidiaries are managed by the central risk department. The risk department is also responsible for the measurement of the payment behaviour of the credit portfolio on a daily, weekly, and monthly basis.
Market risks arise from open positions in interest rate and currency products. They are managed by the central treasury function, which is also, in close cooperation with FP&A, responsible for Group cash flow planning and ensures the necessary liquidity level for all Group entities.
Operational risks, IT risks, as well as legal and regulatory risks, are of high relevance for The Group. Regulatory and legal risks are managed centrally by the Group’s legal function in close cooperation with the authorities in the respective countries and relevant stakeholders. Potential or foreseeable changes in applicable laws are analysed on an ongoing basis and any necessary modifications to the company’s operations are implemented proactively.
The COVID-19 pandemic
The Group decided, in the early stages of the COVID-19 pandemic, to limit lending activities to higher risk customers in both the consumer and SME lending segments. After having revised its loan policies and scoring algorithms in Q2 2020, to improve underwriting in times of such high volatility, the company found itself in Q3 2020 in a healthy position to actively target customers that were in a stable financial situation despite the ongoing pandemic.
The adjusted algorithms and scoring policies helped the Group to maintain and even improve payment behaviour in certain countries during Q2 2020, and this healthy payment behaviour has been maintained during Q3 2020, Q4 2020 and Q1 2021, while disbursement rates have increased as demand has returned in key markets.
The Group continues to tightly monitor its underwriting performance for any early indications of deteriorating payment behaviour and properly judge the impact of governmental measures.
Due to this combination of tighter monitoring and a better understanding of the economic impacts of COVID-19-related lockdowns, The Group has maintained healthy portfolio quality through the pandemic and has not seen any significant impact on materialised credit losses.
The Group manages its risk provisioning in accordance with IFRS 9, that relies on a forward oriented methodology. Based on future macroeconomic indicators and previously recorded correlations, the reserving model is adjusted in accordance with the macroeconomic outlook. Based on this rigorous reserving model, the company increased its credit loss provisioning by
The Group retained its current provisioning unchanged after having taken cognisance of the economic forecasts for 2021, thereby assessing the impact of the COVID-19 outlook for 2021 macroeconomic forecasts. Accordingly, the expected credit loss model inputs utilised during Q1 2020 were deemed adequate to determine its Expected Credit Losses based on management judgement, and management will continue to closely monitor the economic forecasts releases and adjust the model inputs and assess its outcomes in the light of revised macroeconomic data and other quantitative and qualitative information.
Rating updates
Fitch Ratings affirmed in March the Long-Term Issuer Default Rating (IDR) of both
Annual General Meeting
The Group’s Annual General Meeting was held on
The board members were re-elected during the Annual General Meeting, Goutam Challagalla,
An authorization to the Board of Directors to decide to repurchase a maximum of 1,086,198 shares in the Company was given. This authorisation is in force until the end of the next Annual General Meeting, however, no longer than until
For further information on the Annual General Meeting, please visit the Groups website.
Subsequent events
Board of Directors proposed the change of the Group name to Multitude SE
The Board of Directors proposed on
The new name emphasises the Group’s role as an enabler, or a platform. The Primelending and Mobile Wallet business have been rebranded SweepBank, a brand with a very clear customer focus and an ambition to make its clients’ lives easier. The name
About
As a pioneer in digital and mobile financial services technology,
Contacts:
IR@ferratum.com
https://www.ferratumgroup.com/investors/ir-contact
Attachment
- Q1_Report-2021_final-HRes
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