Solid 9M 2023 performance with net profit of €26.4 million and Adjusted EBITDA of €91.9 million
Strong balance sheet with net loan portfolio now over one billion euros
Successful bondholder vote to extend EUR 2025 bond maturity to May 2028
Operational Highlights
• Online loan issuance volume of €423.4million in the Period compared with €357.6 million in 9M 2022, up 18%year-on-year. Demand for credit remains strong in most markets, with yearly issuance growth driven by Czech Republic, Spain and Philippines.
• Near-prime portfolio development aligned with ability to sell those loans to TBI Bank. Over €23 million of Lithuanian near-prime loan principal was sold to TBI Bank from January to October 2023.
• TBI Bank loan issuance volume during the Period grew by 29% year-on-year to €652.3 million from €507.4 million in the prior year period, with increased issuance in all products.
Financial Highlights
• Interest income from continuing operations up 27% year-on-year to €288.8 million in the Period compared with€227.3 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 9M 2023 was 44.2%, a significant improvement from 49.0% in 9M 2022 (excluding Poland),despite the increase in total operating costs year-on-year.
• Adjusted EBITDA was €91.9 million for the Period, up 10% year-on-year (compared to the proforma EBITDA excluding Poland and including Philippines) delivering a 32% adjusted EBITDA margin. The interest coverage ratio as of the date of this report is 2.1x, impacted by the increased interest expense at TBI Bank in recent quarters.
• Post-provision operating profit from continuing operations for the Period was €45.2 million, benefiting from the 27% year-on-year increase in operating income (revenue), with profit after tax of €26.4 million.
• Fundamental asset quality indicators at product level remain broadly stable. Net impairment charges of €110.4 million reflect the larger portfolio, different product mix in online and reduced debt sales activity. Cost of risk at 14.1%, relatively unchanged from the H1 2023 level.
• Net receivables up 21% to €1,022.2million as of 30 September 2023 compared with €846.4 million as of 31 December 2022.
• Overall gross NPL ratio at 9.9% as of 30September 2023 (12.8% for online), compared with 8.8% as of 31 December 2022 (9.0% for online). TBI NPL ratio at 9.4% as of 30 September 2023, compared with 8.7% as of 31 December 2022.
Liquidity and funding
• Strong liquidity position, with€49.1 million of cash in the online business at the end of the Period.
• Solid capital position at TBI Bank(21.1% capital adequacy ratio) despite continued growth in risk weighted assets. The bank made a further MREL eligible debt issue of €1.5 million in Q3 and is considering increasing its bond funding.
• In October 2023, successful bondholder vote to extend the maturity of the EUR 2025 bonds to May 2028, with 74%participation and 94% approval rate. The T&Cs of the bonds will be formally amended in early December 2023.
• Further deleveraging in October and November 2023 with €3.0 million of net bond buybacks ahead of planned cancellation of €15.0 million of EUR 2025 bonds in December 2023.
Kieran Donnelly, CEO of 4finance, commented:
“We have managed to deliver EBITDA growth of 10% over this period, while also having significant growth in issuance and assets. This growth positions us well for the future as we continue to manage costs and remain focused on efficiency. The successful vote to extend our 2025 bonds until May 2028 allows us to take full advantage of these opportunities. This was only possible with the strong support of our investors for which we are grateful. Our strong and liquid balance sheet allows us to continue our growth and supports our measured expansion plans.”
