4finance Holding SA Investor Presentation for 9 month 2016 results 10 November, 2016 0
Summary of first nine months of 2016 • 4finance has established a leading business • European market leader in online and mobile consumer finance • Diversified business, including EU licensed bank, with strong financial track record • Total assets have doubled in a year, net loans over EUR 500 million • Solid results for first nine months, driven by core business • Strong revenue growth, +25%, and Adjusted EBITDA generation, +16% • Sound business performance following changes in regulation • Costs held flat Q3 from Q2 in core business, risk metrics in line with expectations • Acquisitions finalised and contributing to profitable growth • TBI Bank solid results post acquisition, strategy in place to enhance IT infrastructure • Friendly Finance delivering volume growth and coordinating on marketing and risk • New market and product investments not yet mature: 15 of our 33 product instances launched H2 2015 onwards • Latin America market entry showing good indications (Mexico, Argentina) • Instalment loan rollout (Poland, Spain, Romania…) • Line of credit (Latvia) • Large scale, market leading operator with capabilities in place to deliver future growth 1
4finance: what has been achieved already The European leader in online and mobile consumer lending: Putting our customers first, providing a convenient and transparent service using cutting edge data-driven technology 33% 3% 25% 25% 80% 80% 22% 22% First nine months of 2016… 9M ’ 2016 return on 9M’2016 9M’2016 9M’2016 profit 5,500,000+ 2,500,000+ before tax average equity revenue growth returning margin customer rate online applications reviewed online loans issued 16 16 3,500 3,50 400 400 9 €840,000,000 7,000,000+ online loans issued registered customers Countries of Leading market 9M ’ 2016 full time Highly operation (1) employees (2) qualified IT positions engineers (3) Notes: (1) Includes Friendly Finance acquisition in June 2016 and Dominican Republic launched in August 2016 (2) Including Friendly Finance and TBI Bank 2 (3) Includes 190 in-house IT specialists and more than 200 third-party contractors
Capabilities in place to deliver revenue growth Quarterly Issuance (Latin America) Only half of our product ‘instances’ are mature • 33 online product sites live by year end EUR 4m • 15 launched in Q3 2015 onwards Latin American expansion on track • Argentina & Mexico volumes increasing • Dominican Republic launched in August • Pipeline: Guatemala, Brazil… Q4 2015 Q1 2016 Q2 2016 Q3 2016 October run-rate Gross portfolio (new instalment loans) Instalment loan roll out • Recent instalment launches in larger EUR 44m markets Denmark (Q3 ‘15), Poland (relaunch Q4 ‘15), Spain (Q2 ‘16) & Romania (Q3 ‘16) • Pipeline: Czech Republic, Mexico… Q4 2015 Q1 2016 Q2 2016 Q3 2016 End- October 3
Highlights of 9M 2016 results: EUR 49.2m profit Net Profit Results show continued progress Revenue continuing operations • Revenue up 25% to EUR 287.3 million, Adjusted EBITDA up 16% +7% • Cost to revenue ratio 47%, stable from previous quarters +25% 49.2 287.3 • Net profit EUR 49.2 m 46.0 229.3 mEUR mEUR Positive contribution from acquisitions • TBI Bank: EUR 8m revenue, EUR 3m net profit (two months) • Friendly Finance: EUR 6m revenue, EUR 0.6m net profit (three months) 9M'2015 9M'2016 9M'2015 9M'2016 • Synergies on marketing, risk and IT infrastructure Adjusted EBITDA +16% Asset quality trends in line with expectations 101.8 • Stable online NPL/sales ratio of 9.6% and impairment/revenue ratio 25% 88.1 • Profitable portfolio sales demonstrate prudent policies • TBI Bank asset quality stable (NPL/gross loans ratio 10.5% with 101% mEUR provision coverage on consumer loans & strong SME collateral coverage) 9M'2015 9M'2016 4
Financial highlights - profitable growth Capital to assets ratio, % (1) Adjusted EBITDA, m EUR Revenue, m EUR 40% 318 120 38% 40% 287 (ex TBI) 102 35% 88 229 88 29% 220 26% 71 149 2013 2014 2015 9M'2015 9M'2016 2013 2014 2015 9M'2015 9M'2016 2013 2014 2015 9M'2015 9M'2016 Net profit from continuing operations Adjusted interest coverage ratio Capital/net loans, % (m EUR ) and net margin 56% 54% 4.6x 47% 4.2x 4.2 44% 4.0x 3.7x 58 37% 49 49 45 46 2.5x 20% min. 30% min. 22% 18% 20% 17% 2013 2014 2015 9M'2015 9M'2016 2013 2014 2015 9M'2015 9M'2016 2013 2014 2015 9M'2015 9M'2016 5 (1) Total assets figure for 2014 adjusted for the effect of bonds defeasance
Quarterly expenses breakdown 70 60 50% 47% 45% 48% 39% 39% 38% 50 3.2 EUR million 5.2 40 11.8 11.5 10.3 11.8 30 5.2 2.9 3.2 2.9 7.9 7.3 0.6 6.3 2.9 12.9 13.9 15.2 20 16.3 2.4 11.9 8.3 6.3 10 14.6 13.8 13.2 11.8 12.1 11.6 11.2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 Marketing Staff IT Other TBI FF Quarterly Cost/revenue, % • Marketing efficiency improving: marketing expense / revenue (ex-acquisitions) decreased to 14.0% (9M16) from 15.5% (9M15) • Focus on cost discipline and cost effective investments to support future growth (costs held flat in Q3 flat Q2) • Acquisitions now included in cost base: marginal increase in cost/revenue ratio for Q3 Note: Other includes debt collection, legal and consulting, application inspection costs, communications, bank expenses, travel, rent and utilities, depreciation & amortisation and other expenses 6 Q1-3 figures reflect reported unaudited results and Q4 figures reflect balance to FY 2015 audited results
Diversified overall loan portfolio Net loan portfolio (1) , mEUR • Net portfolio over EUR 500m following inclusion of TBI Bank 510 • 87% consumer loans • 64% online loans / 36% banking 185 Bank • Online loans issued in 9M ’ 2016: EUR 841m 308 241 - growth of 7% from 9M ’2015 178 Online 325 Net loan portfolio, 30/09/2016 2013 2014 2015 9M'2016 Baltics 15% SME (TBI) TBI Bank: 36% 13% Online: 64% (funded @ 1.6%) Online loans issued (2) , mEUR (funded @ 12%) Romania (TBI) 10% 1,062 Scandinavia 15% 841 805 Bulgaria (TBI) 13% 538 BG/RO (online) 1% Poland LatAm 17% 0.3% Georgia/ Czech/ Armenia Slovakia Spain 6% 4% 6% 2013 2014 2015 9M'2016 7 (1) Gross loan portfolio less provisions for bad debts (2) Continuing operations only
Online: non-performing loans and provisioning stable • Stable NPLs to issued loans ratio (1) Loans that are overdue more than 90 days are considered as non- performing (NPLs) 9.5% 9.6% 9.4% 9.2% 9.0% • 8.8% At the end of Q3 2016, NPLs represented 9.6% of total issued loans over the last 730 days (excluding acquisitions) • Actual loss experienced on NPLs is approximately 50% (53% as of 30/09/2016) • Provisions for default are typically 5-10 p.p. higher 2013 2014 2015 Q1 2016 Q2 2016 Q3 2016 Conservative online loan provision coverage Non-performing loans (NPLs) as % of total loans issued (1) 74% 9.6% of total 61% loans issued 53% 8% EUR 195m EUR EUR 2,037 m 1,842m Loss given default Provision Provision coverage Overall provision for default buffer coverage Loans issued 07/2014-6/2016 NPLs as of Repaid and performing loans portfolio (730 days) 30/09/2016 30/09/2016 8 (1) Total issued loans include the amount of loans issued, excluding Friendly Finance and TBI Bank, during 730 days ending 90 days prior to the end of period
Online: asset quality trends for single payment loans • Non-performing loans to loan issuance ratio 20% tends to improve over time in each market • More data: better scorecards • More experience: better debt collection NPL / 2 year loan issuance • More returning customers 15% Spain • Different characteristics for each market Georgia • Portfolio mix shift drives overall Group Denmark NPL/sales ratio (eg growth in Spain) 10% Czech • Current trend is in line with expectations • Increases in some markets with lower Poland new issuance (Finland, Lithuania, Finland Sweden) 5% Latvia • Higher NPL ratio countries also have higher Lithuania interest rates and revenue Sweden • Impairment / revenue ratio stable 0% 2013 2014 2015 Q3 2016 9
TBI Bank: loan portfolio and asset quality Net loan portfolio (1) , 30/9/2016, mEUR TBI portfolio overview 182 200 169 • Diversified loan portfolio 153 150 64 − 65% consumer, 35% SME/leasing 65 55 − Even split Bulgaria/Romania SME 100 • Consumer portfolio similar to 4finance Retail 118 − Very granular, small ticket sizes, cash/POS/Cards 105 50 97 − c. EUR 250 average balance for POS and Cards and c.EUR 600 for cash loans 0 2014 2015 9M'2016 − Average tenor 13/20 months for POS/cash loans in Bulgaria and 26/36 months in Romania Consumer gross portfolio by type, 30/9/2016 • SME portfolio is well diversified • Diversified by economic sector • Top 10 exposures total 10% of gross portfolio 1% 6% • Cash loans (EUR585 av. size, 113k active, Average tenor 4-5 years 49% av. Rate) • Overall NPL / Gross loans ratio 10.5% POS (EUR260 av. size, 209k active, 35% av. Rate) • Consumer portfolio 8.9% with 101% provision coverage 51% Cards (EUR253 av. size, 33k active, 28% 42% • SME/leasing portfolio 13.7% with 27% provision av. Rate) coverage and 56% average loan-to-value collateral Other • Impairment / revenue ratio of 15% 10 (1) Gross loan portfolio less provisions for bad debts, based on management reporting, book value
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