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
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.”
