Operational Highlights
• In July, the Group’s online loan issuance since inception surpassed the €10 billion milestone.
• Online loan issuance volume of €275.9 million in the Period compared with €218.9 million in H1 2022, up 26% year-on-year. Demand for credit remains strong in most markets, with yearly issuance growth driven by Czech Republic, Latvia and Philippines.
• Near-prime portfolio development aligned with ability to sell those loans to TBI Bank. Over €19.5 million of Lithuanian near-prime loan principal was sold to TBI Bank from January to August 2023.
• TBI Bank loan issuance volume during the Period grew by 35% year-on-year to €427.9 million from €315.8 million in the prior year period, with increased issuance in all products.
Financial Highlights
• Interest income from continuing operations up 30% year-on-year to €187.9 million in the Period compared with €145.1 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 H1 2023 was 44.7%, a significant improvement from 50.3% in H1 2022 (excluding Poland), despite the increase in total operating costs year-on-year.
• Adjusted EBITDA was €58.8 million for the Period, up 6% 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 2.2x, impacted by the increased interest expense at TBI Bank in recent quarters.
• Post-provision operating profit from continuing operations for the Period was €29.9 million, benefiting from the 29% year-on-year increase in operating income (revenue), with profit after tax of €16.9 million.
• Fundamental asset quality indicators at product level remain broadly stable. Net impairment charges of €69.6 million reflect the larger portfolio, different product mix in online and reduced debt sales activity. Cost of risk at 13.7%, stable in Q2 compared with Q1, vs 9.5% in the prior year period.
• Net receivables up 15% to €972.1 million as of 30 June 2023 compared with €846.4 million as of 31 December 2022.
• Overall gross NPL ratio at 9.6% as of 30 June 2023 (12.0% for online), compared with 8.8% as of 31 December 2022 (9.0% for online). TBI NPL ratio at 9.1% as of 30 June 2023, compared with 8.7% as of 31 December 2022.
Liquidity and funding
• Strong liquidity position, with €47.0 million of cash in the online business at the end of the Period.
• Solid capital position at TBI Bank (21.5% capital adequacy ratio) despite continued growth in risk weighted assets. Further MREL debt security issue of €10 million in Q2.
• The Group sold nominal €8 million of 2025 bonds that were held in treasury to its subsidiary TBI Bank EAD in June at market price.
• The Group is reviewing alternatives regarding its February 2025 bond maturity.
Kieran Donnelly, CEO of 4finance, commented:
“Last month we surpassed €10bn in online loan issuance since inception, a testament to the business’s adaptability and resilience, and a reminder of how our customers value access to responsible, regulated lending. We continue to grow our loan issuance across both our online and banking arms to meet the rebounding demand for credit. Our ongoing focus on running an efficient and focused business has further improved our cost/income ratio, while we grow online in new markets and TBI continues to grow across all areas.”
