IuteCredit reports unaudited results for H1 2020

IuteCredit reports its unaudited results for H1 2020 and reminds of the company’s earnings call, happening tomorrow, on 31 July 2020, at 10:00 CEST. Please note this call will not in any way be organized or monitored by Mintos.

Below, you can read the operational and financial highlights of the company’s report, as well as comments by the CEO of IuteCredit. 

Operational highlights

  • Operating costs cut by -25% while keeping headcount at 350+ people;
  • Treasury build-up of cash and gold-backed, exchange-traded funds exceeding 12,0% of the balance sheet;
  • Controlled contraction of the balance sheet to € 96,7 million (Q1 2020: € 105,6 million); contraction has been stopped since July 2020;
  • The number of loans issued in the period under review decreased y-o-y 24,7% to 92 880 (H1 2019: 123 368);
  • The principal amount of loans issued decreased y-o-y 23% to € 49,9 million (H1 2019: € 65,0 million);
  • Gross loan portfolio down 2,3% to € 90,0 million (31 December 2019: € 92,1 million).
  • An additional € 7,9 million added to loan provisions in Q2, a total of € 11,8 million in H1 2020); reversal expected with customer repayment discipline current levels.
  • Home markets (see report for details) prove to be remarkably resilient; loan demand and customer repayment discipline picking up since June 2020;
  • Repayment discipline, measured by Customer Performance Index (CPI), on course for recovery after an interim decline; CPI0 and CPI30 (see report for details for both positions) still approximately by -5% down pre-pandemic;
  • Annual percentage rates (APR) of newly originated loans increased by 8% on average, to compensate for the increased risk environment; simultaneously recording stronger demand for loans.


Financial highlights

  • Interest and commission fee income up 27,5% to € 22,7 million (H1 2019: € 17,8 million EUR).
  • Net interest and commission fee income increased by 18.5% to € 17,1 million (H1 2019: € 14,5 million).
  • Total income up 57,6% to € 28,9 million (H1 2019: € 18,3 million).
  • Cost to income ratio at 27,1% (H1 2019: 44,6%), reflecting different portfolio size and operational cost cutting.
  • EBITDA increased by 5,4% to € 9,9 million (H1 2019: € 8,6 million).
  • Strong capitalization and resilient profitability exceeding Eurobond covenants.
  • Net profit for the period decreased 65,3% to € 1,3 million (H1 2019: € 3,8 million) as the Group added to provisions a very conservative € 7,9 million in Q2, totaling € 11,8 million.
  • An increase in equity along with repayment of liabilities resulted in a stronger equity ratio.


IuteCredit’s CEO comments

Tarmo Sild, Group CEO of IuteCredit: “Uncertainties arising from the coronavirus pandemic and its effects on our business prompted us from early March to take a conservative and strict course in the first half of 2020. Accordingly, OPEX had to be cut, cash inflows were primarily used to repay liabilities and to build cash buffers, and very few new loans were issued, until clearance of the circumstances.

Our loan portfolio has passed the initial stress test with good cash flow results. At the moment, the treasury buffer may be too thick and needs positive exploitation during Q3 and Q4, if the situation evolves favorably. The balance sheet contracted slightly less than we had expected in our models, despite the conservative provisioning we applied to the gross receivables. In June, we accelerated new loan payouts again as the customer performance index had significantly improved since May. Most likely the business contraction is over, and the bottom has been passed.

We have probably set aside more provisions, than actually necessary and in line with the industry average. Creating the loan impairment buffers was the single largest expense factor in the H1 profit statement. Considering the early signs of improved repayment discipline, we expect to see a reversal of provisions in the second half of the year and in a longer future.

Since the bulk effect of the grace periods and economic restrictions will probably be felt with a delay in the third and fourth quarters, IuteCredit’s results for the first half of 2020 are a ray of hope. We, therefore, stick to our assessment of commercial caution that the economic effects of the pandemic can still neither be determined in detail nor reliably quantified and that the results of IuteCredit will be down on the previous year. As we only had to make limited adjustments to our operating activities to meet the current challenges, we still have an ace up our sleeve – with the possibility of further OPEX cuts should we be exposed to unexpected setbacks. However, if the positive development in coping with the pandemic continues, we are confident that we will be able to make a profitable 2020, grow the performing asset base and performing customer pool above the 2019 level, and deliver a positive return on equity to shareholders.”

View the full unaudited report of IuteCredit

About IuteCredit:

IuteCredit – established in 2008 – is a leading European personal finance company. The Group is specialized in consumer credits via its 100% subsidiaries using equity and loan capital. IuteCredit serves customers currently in Moldova, Albania, North Macedonia, Bulgaria as well as Bosnia and Herzegovina. IuteCredit’s loan products are unsecured consumer loans with maturities between 1 month and 36 months and car-secured loans with maturities up to 60 months. The mission of IuteCredit is to create an extraordinary experience in personal finance by exceeding customers’ expectations.


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