25 February 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 twelve months ending 31 December 2021 (the ‘Period’).
Operational Highlights
- Customer repayment dynamics continue to be good, with fundamental asset quality metrics stable across the business.
- Online loan issuance volume of €221.4 million in Q4 2021, up 16% year-on-year, and closely tracking Q3 levels despite the reintroduction of Covid-related restrictions in most markets in the winter. Demand for credit remained good, with issuance driven by continued strong performance in Poland and further growth in Spain.
- In November, the Group's loan issuance since inception surpassed the €9 billion milestone.
- Near-prime portfolio development aligned with ability to fund those loans via TBI Bank. During 2021, over €20 million of Lithuanian near-prime loans were sold to TBI Bank.
- TBI Bank loan issuance volume during the Period grew by 50% year-on-year to €523.4 million from €349.8 million in the prior year period, with increased issuance in all products.
Financial Highlights
- Interest income of €296.0 million in the Period, down 4% from €307.9 million in the prior year period. Interest income of €80.1 million for the fourth quarter is 4% up QoQ and 13% year-on-year. Interest income from continuing products has grown every quarter since Covid impact in Q2 2020.
- The cost to income ratio for 2021 improved to 55.4% vs 56.9% in the prior year. Cost discipline and operational efficiency remain in focus both in online business as well as at TBI, where the income growth outpaces the increase in costs.
- Good fundamental asset quality indicators, disciplined lending and an active NPL debt sales market resulted in a significant reduction in net impairment charges (down 36% YoY) and cost of risk (9.0% for the Period vs 14.2% in the prior year period).
- Adjusted EBITDA was €108.2 million for the Period, up 44% year-on-year, delivering 37% annual adjusted EBITDA margin vs 24% in the prior year period. The full interest coverage ratio as of the date of this report is 2.6x.
- Post-provision operating profit for the Period was €61.2 million, benefiting from the 36% year-on-year reduction in net impairment charges, with a profit before tax of €52.3 million.
- Net receivables totaled €658.1 million as of 31 December 2021, up 25.0% during the year. During the quarter, TBI Bank grew net receivables another 7% and the online business portfolio increased 1% QoQ.
- Improved overall gross NPL ratio at 11.3% as of 31 December 2021 (12.7% for online), compared with 17.0% as of 31 December 2020 (19.2% for online). TBI NPL ratio has improved significantly at 10.7% as of 31 December 2021, compared with 15.7% as of 31 December 2020.
Liquidity and funding
- Strong liquidity position, with €80.1 million of cash in the online business at the end of the Period.
- Strong capital position at TBI Bank (22.9% capital adequacy ratio) despite continued growth in risk weighted assets. Tier 2 debt is now registered with BNB and is included in capital and liquidity ratios. Use of an updated approach (ASA) to calculating operational risk in Q4 has also improved capital ratios.
- Completion of bond refinancing process in October, with new issue of 5-year EUR bonds raising €175.0 million to redeem the remaining USD 200.0 million bonds. Balanced medium-term capital structure in place, with two bond issues of similar sizes, in euros, maturing in February 2025 and October 2026.
Kieran Donnelly, CEO of 4finance, commented:
“Customer demand for credit accelerated in the second half of the year, taking us past the €9bn loan issuance milestone and helping to deliver our highest EBITDA margin in years. We are emerging from the pandemic with a leaner business, a continued focus on cost efficiency, a robust cash position and secure funding. TBI Bank continues to grow the reach of its business organically, and as a Group we have successfully scaled up sales of near prime loans to the bank.
“I want to thank all our staff for their hard work in delivering these strong operational and financial results. We have good foundations for growth in 2022 as people continue to value a safe, regulated option for convenient credit.”
