This presentation contains, or may be deemed to identify forward-looking statements. contain, forward-looking statements. These By their nature, forward-looking statements involve statements relate to future events or future financial risks and uncertainties because they relate to events Nothing in this presentation constitutes investment performance of Ferratum. and depend on circumstances that may or may not advice and this presentation shall not constitute an occur in the future. Future results may vary from the offer to sell or the solicitation of an offer to buy any Such statements are based on the current results expressed in, or implied by, the forward- securities of Ferratum or otherwise to engage in any expectations and certain assumptions of Ferratum’s looking statements, possibly to a material degree. investment activity. management, of which many are beyond the Ferratum’s control. The words "aim", "anticipate", All forward-looking statements included herein are "assume", "believe", "continue", "could", "estimate", based on information presently available to "expect", "forecast", "guidance", "intend", "may", Ferratum and, accordingly, Ferratum assumes no "plan", "potential", "predict" "projected", "risk", obligation to update any forward-looking "should", "will" and similar expressions or the statements, unless obligated to do so pursuant to an negatives of these expressions are intended to applicable law or regulation.
2018 Highlights – Results are well within the guidance range & operational improvement in 2H/18 was achieved ▪ 2018 Group revenues grew with +18.3% to EUR 262m, revenues within the guidance range of EUR 260m-265m ▪ 2018 EBIT up by 18.7% to EUR 37.9m, margin at 14.4% ▪ Approval rate issues with CreditLimit product mostly solved: ▪ In 2018, the credit volume grew with +27% to EUR 132m, reflecting 50% of Ferratum’s total credit volume ▪ In Q4 2018, growth was at +32.7% ▪ Strong growth in SME Lending revenues: +60% to EUR 21m ▪ Cost reduction and staff streamlining introduced: Headcount reduced from 958 in Q2/18 to 880 as at the end of Q4/18 2019 Expectation and key priorities ▪ EBIT expectation > EUR 45m ▪ Management focus on a further improvement of operational leverage and loan portfolio quality ▪ Ongoing strong growth in SME Lending and Credit Limit expected ▪ Further improvement of the Mobile Bank with Mobile Wallet (light onboarding) 4
Key takeaways for 2018 Consum sumer r Busines iness Mobile ile Bank nk loans ns loans ns ▪ FY performance well within guidance ▪ Risk procedures improved and overall cost base was decreased Years profitable Active & former Countries ▪ We have a positive outlook into the growth customers future FY 2018 Year-on-year Year-on-year revenue revenue growth EBIT growth Founded EU Banking Frankfurt Helsinki 2005 Licence Prime Standard 5
Digital lending – product category evolution LOW LOAN AMOUN MOUNT HIGH All products are based on the same principles: Full digital setup and high user convenience, PRODUCT: SOLU LUTI TION: real-time, paperless LONG SME SME – Business loan offering for small and medium size companies Primel eloan an Prim imeloan an - strategic product for entering larger segments, launched already in two TURITY countries MATU Credit Limit Credi dit t Limit it and d PlusLoan sLoan continue to be the main components of revenue PlusLoan an Micro rolo loan an strategically utilized primarily as a product to enter new markets SHORT Microloan HIGH APR APR LOW 6
Diversifying to address a range of borrowing needs Average Average Loan Revenue FY Revenues by Active Products Loan Value Term Share Product (€,000) Markets 2017 Primeloan (incl. Mobile Bank ) 529 +177.5% y-o-y €3,000 – €20,000 / €6,004 4.9 years 0.6% 2 (5) 2018 1,468 1 – 10 years Business (SMEs) 2017 13,135 +60.0% y-o-y 8.0% Up to €250,000 / €13,503 420 days 9 6 – 18 Month term 2018 21,008 Credit Limit 2017 103,774 +27.5% y-o-y 50.5% Up to €3,000 / €1,269 N/A 10 Digital revolving credit line 2018 132,321 PlusLoan 25.0% 2017 €300 – €5,000 / €753 355 days 60,315 9 +8.8% y-o-y 2 – 36 month term 2018 65,641 Microloan 15.9% €25 – €1,000 / €210 29 days 13 2017 43,886 -5.0% y-o-y 7 – 90 day term 2018 41,709 7
Credit Limit – Growth 40.000 ▪ EUR ‘000 accelerating in Q3 and Q4 and back on track 35.000 PlusLoan – remains stable ▪ 30.000 throughout 2018 Microloan – revenues ▪ 25.000 stable/decreasing in line with strategy 20.000 SME – growth trend ▪ continues 15.000 Prime Loan: continued ▪ growth but still a small 10.000 share of revenue 5.000 - * Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 *Multipart loans in Netherlands were launched in Q4 2016 and initially classified as Microloans. These have been reclassified 8 in Q2 2017 from Microloan to PlusLoan according to the further development of the product and the management structure
Total customers* Active customers*** 792.080 782.220 2.000.622** 1.876.144 1,561,687 695.440 2016 2017 2018 2016 2017 2018 * Active and former customers who have been granted one or *** Customers with a Mobile Bank account and lending several loans in the past or has an open mobile account. customers who have had an open balance in the last 12 months. If loans are >24m overdue, the customer is not ** Slight changes Q on Q due to GDPR related deletions of considered active. former customer records 9
Management progress Operating costs have stabilized to improve performance while revenue growth is recovering Accele lerate ate growth h of lend ndin ing by improving ving risk & increase custo tomer intak take EUR ‘000 Improve conversion rate, scoring & underwriting ▪ 80.000 Processes for increasing customer intake and efficiency ▪ 70.000 Reshap hape organi anisati ation 60.000 Staff streamlining ▪ 50.000 Strengthen top management ▪ Create five cylinders and responsibilities common to every product ▪ 40.000 Lead generation, conversion funnel, underwriting ▪ & collections, CRM, product & pricing 30.000 20.000 Rebala lanc nce resour urces 10.000 Focus on lending in existing markets ▪ More resources allocated to risk management and automation ▪ 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Review w geograp aphi hies for profit itab abil ilit ity Considering withdrawal from 1-2 non-performing countries ▪ Revenue Total costs 10
14 years of experience adapting to regulatory changes Ferratum’s experience with interest rate cap changes: Current and expected interest rate caps ▪ Adjusted pricing to meet legislation, leading to lower yield per loan Sweden – implemented in September 2018 ▪ Increased loan amount and term, leading to higher CLV* New law capping effective interest rates for high cost loans at 40%. We stopped selling ▪ microloans in Sweden and switched to products with higher loan principals, which can be ▪ Tightened scoring, leading to better payment behaviour offered at lower rates of interest in line with the new capping ▪ Adjusted or newly adapted segmentation, Latvia – implemented in October 2018 leading to increased amount of new customers New rules on creditworthiness assessments introduced. We are offering fully compliant ▪ products and is also planning further changes to cap daily total costs, which are expected to ▪ Overall outcome from the above increases our earnings introduced in summer 2019 and decreases our credit losses in the long run Romania – implemented in January 2019 National Bank of Romania has adopted adjustments to the relevant debt to income ratio. We ▪ have adapted our processes to meet this legislation; with ongoing monitoring of additional changes that will impose APR capping on consumer loans Finland – expected Autumn 2019 New legislation has been approved and will enter into force in September 2019 ▪ Estonian case showing us the future possibilities with interest rate caps 11 * Customer Lifetime Value
Estonia Estonia developments ▪ Interest Rate cap introduced in 2015 Chart presented with indexed figures since 2014 ▪ Ferratum significantly reduced interest rate accordingly 1.400 90% 80% ▪ Portfolio increased significantly 1.200 70% 1.000 ▪ Portfolio return (Revenues/portfolio) down from 118% in 2014 to 34% 60% in 2018 800 50% ▪ Revenues up by 373% since 2014 and Profit accordingly 40% 600 30% ▪ Credit Losses/Portfolio reduced; gross margin recovered 400 20% Sweden: Q4 results indicate positive conversion to new interest 200 10% rates as well 0 0% ▪ Interest Rate cap introduced 1 September 2018 2014 2015 2016 2017 2018 Revenue Credit losses Net AR Losses / Portfolio % ▪ Ferratum significantly reduced interest rate accordingly Gross margin % ▪ Revenues stable; Portfolio increased moderately in Q4 ▪ Credit Losses/Portfolio reduced; gross margin increased 12
Risk modell llin ing review programme IFRS S 9 ad adjustmen ustments ts Fina nanci cial l perfor formance nce Bal alance nce she heet Operating ting cash sh flow Cost t of capital tal and financin cing 13
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