A moderate increase in the volume of loans corresponds to the inflationary trends in the Latvian economy
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Common 4finance Holding SA Group turnover from operations in ten countries in 2022 reached 337 million euros. The company’s turnover from commercial activities in Latvia was 26 million euros last year.
4finance Group profit before tax was 48.9 million euros, of which 10% was profit from commercial activities in Latvia.
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The group paid 5.2 million euros in taxes in Latvia last year, which is 39% more than a year ago.
AS 4finance the financial report now reflects everyone 4finance retail brands that merged in 2022. The increase in profit was mainly achieved due to this reorganization of the company, which simplified its structure, as well as the wider use of automation processes in the company’s business processes. The increase in turnover reflected the increase in lending volume last year, which in turn was facilitated by the country’s economic conditions. Profit before tax from commercial activity in Latvia in 2022 was 4.9 million euros, which is an insignificant increase compared to the indicators of 2021. This indicator has grown due to the dividends included in it from other countries of the Group, where AS 4finance is a shareholder.
The steady growth of lending volumes is explained by the general inflation rate in the country and is proportionally equivalent to the overall trend in the national lending sector.
As a result, AS 4finance the total turnover from the provision of lending services in Latvia, compared to 2021, increased by 20.5%. A similar trend can also be observed in the banking sector, which, unlike the providers of alternative financial services, was also affected by the increased EURIBOR rates of the European Central Bank, as a result of which the interest rates for both active and newly issued loans increased at least twice for bank customers.
“The Latvian market is very sensitive to any shocks and crises. During the period of COVID-19, there was a sharp reduction in lending volumes, as people were uncertain about tomorrow and took out loans more cautiously. At that time, in 2020, 4finance suffered a loss of 3.6 million. The lending industry also experienced a similar contraction in 2022 with the start of the war in Ukraine and the sanctions against Russia and Belarus, which contributed to a rapid rise in inflation. At the moment, when the pandemic is already in the past, but society has more or less got used to the war situation, the market is gradually stabilizing and returning to the previous habits of using lending services,” AS said. 4finance regional manager in Latvia Guido Endlers.
“AS 4finance the increase in turnover and profit in Latvia in 2022 can be explained by the fact that consumers need more financial resources to compensate for the increase in the price of goods and services.
Despite the fact that the total volume of loans issued by non-bank lenders increased in 2022, data from the Consumer Rights Protection Center (PTAC) show that the quality of the loan portfolio of this lending sector has remained stable, and 91.16% of loans from the total loan portfolio are repaid without delay. This, in turn, means that people use credit services thoughtfully, do not borrow impulsively, but plan their finances for the long term. However, regardless of demand, we continue to adhere to the principles of responsible lending, cooperating only with clients who are able to qualify for the company’s solvency assessment criteria. Thus, we approve credit applications of only 10% of new customers. Thanks to this, 4finance’s customer repayments are better than the average in the industry – within thirty days our customers repay 93.7% of their loans, while in the period up to 90 days we recover a total of 96.7%,” adds Endler.
By 4finance
Founded in 2008, 4finance is one of Europe’s largest digital consumer credit groups, operating in 10 countries around the world. Using automation and a data-driven approach in all business processes, 4finance Group has developed rapidly, issuing more than 10 billion euros worth of short-term and long-term loans, lines of credit and other related lending services since its inception.
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4finance manages a portfolio of market-leading brands, offering simple, useful and transparent products to millions of customers. The group responsibly provides convenient products to many consumers who are underserved by traditional service providers.
The group offers deposits as well as consumer and small and medium-sized business financing through its subsidiary TBI Bank, an EU-licensed institution with operations in Bulgaria, Romania and Greece.
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2023-08-03 15:08:16
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