AB

NEO Finance

Sales report 2018Q3

Vilnius

2018-10-10

Events

2

Shareholder equity increased by 300K. Total amount invested in company‘s

capital exceeds 3.18M;

400K EUR of bonds issued in July;

New TV campaign for borrowers was launched in August;

New clients „Viena sąskaita“, „Mano gilė“ signed up to PIS service;

NEO Finance legal form changed from limited liability company to public

company;

Vytautas Bučiūnas, former Swedbank Head of Corporate Banking Division,

Vice-Chairman of the Board, was appointed as new member of the

Supervisory board;

New feature auto-invest in the secondary market implemented in August;

Management accounts

3

The vast majority of revenues related to P2P lending activities are distributed throughout the loan period. Management

accounts represent future broker fee income as the result of loans issued in specific quarter.

At the end of 2018 Q3 receivable broker fee amounted to 2.21 mln. EUR

* Broker fee income in the table is represented as a result of the loans issued at the same quarter, which will be received

throghout the loan period. E.g. 294 thousand EUR is a result of 3,928 thousand EUR issued, and will be received

throughout 60 months.

2018 Q3 2018 Q2 ∆, % 2017 Q3 ∆, %

Loans issued,K EUR 3,928 3,171 24% 2,396 64%

Broker fee income,K EUR* 294 219 34% 167 76%

Other income, K EUR 176 150 17% 80 120%

Total income, K EUR 470 369 27% 247 90%

P2P consumer loan market in Lithuania

4

In 2018 Q3 P2P consumer loan market size reached 6.90 million EUR. Compared to 2017 Q3 year on

year the issued loans volume grew by 52% from 4.54 million EUR. “NEO Finance” market share

during 2018 Q3 stably grew to 57% with 3.93 million EUR of loans issued.

Monthly amount of issued consumer loans through all Lithuanian platforms did not surpass the peak of

2.38 million EUR reached in March. On the other hand “NEO Finance” reached a record of 1.42

million EUR financed in September. Compared to the same month in 2017, “NEO Finance” issued

loans volume grew by 60%.

Source: Data from Lithuanian P2P lending platforms

0.901.02

0.951.03

0.88

1.08

0.93

1.13 1.111.20

1.301.42

1.66

1.84 1.95

2.04

1.88

2.38

2.06

2.20 2.24 2.22 2.32 2.36

0.00

0.50

1.00

1.50

2.00

2.50

2017-10 2017-11 2017-12 2018-01 2018-02 2018-03 2018-04 2018-05 2018-06 2018-07 2018-08 2018-09

P2P consumer market, loans issued, million EUR

NEO Finance Market size

Borrowers

5

In 2018 Q3 low fees and increasing brand

awareness attracted 3 866 new registered

borrowers. New TV campaign to attract

borrowers was launched in August. At the end

of 2018 Q3 the number of registered borrowers

grew to a total of 47 338. Compared to 2017

Q3, the number of registered borrowers grew

by 51%.

In 2018 Q3 the number of active borrowers grew

by 903 users. At the end of 2018 Q3 the number

of active borrowers reached a total of 5 949.

Compared to 2017 Q3, the number of active

borrowers grew by 138%. We are satisfied with

the results of current TV campaign, which

contributed to the record active borrowers growth

during a quarter.

36373

39992

43472

47338

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Registered borrowers

3572

4320

5046

5949

0

1000

2000

3000

4000

5000

6000

7000

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Active borrowers

Investors

6

In 2018 Q3 investors‘ trust, stable returns,

transparent communication, timely management

reports and audited financial reports attracted

882 new registered investors to a total of 8

417. Compared to 2017 Q3, the number of

registered investors grew by 73%. We see a

growing traction with international investors, as

“NEO Finance” opened up for European

investors in March, 2018.

Investors have already earned 2.3 million EUR in returns.

In 2018 Q3 the number of active investors grew

by 604. At the end of 2018 Q3 the number of

active investors reached a total of 5 348.

Compared to 2017 Q3, the number of active

investors grew by 92%.

6024

6792

7535

8417

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Registered investors

3653

4219

4744

5348

0

1000

2000

3000

4000

5000

6000

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Active investors

NEO Finance investments

7

“NEO Finance”, as a consumer credit provider, co-invests into loans together with investors. A policy

of avoiding conflicts of interest is provided to every investor. In 2018 Q3 “NEO Finance” invested a

record amount of 379 thousand EUR. Invested amount grew due to increased demand from the

borrowers.

Since the launch in December, 2015 “NEO Finance” investments into loans reached 1.59 million

EUR.

261

150162

379

0

50

100

150

200

250

300

350

400

2017 Q4 2018 Q1 2018 Q2 2018 Q3

NEO Finance investments, K EUR

Overdue loans

8

At the end of 2018 Q3 out of 8 393 issued loans - 667 loans, or 7.95%, were overdue for

more than 90 consecutive days. Respectively, out of 21.6 million EUR financed – 1.90 million

EUR or 8.81% were overdue more than 90 days.

“NEO Finance” is highly concerned about loan repayments, therefore great effort was put in a

recovery of payments from terminated loans. During 2018 Q3 a total of 80 thousand EUR were

recovered and distributed to investors.

2.82%

8.72%

15.91%

8.81%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

A rating B rating C rating Total

EUR, overdue >90 days, %.

32

38

50

80

0

10

20

30

40

50

60

70

80

90

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Amount recovered, K EUR

Recovery in 2 years

9

2018 Q3 marks 24 month point for loans terminated during 2016 Q3.

During 2016 Q3 14 loans were terminated with remaining principal of 21 670 EUR. During 24

months 17 414 EUR or 80.4% from principal amount were recovered. Below the distribution

between “NEO Finance” and investors is presented.

It should be noted, that all third party legal costs incurred by “NEO Finance” related to

recovery process are covered first, while NEO Finance intermediary fees are covered on par

with investors.

21.0%

59.4%

80.4%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

Terminated: 2016 Q3

Recovery in 2 years as % of principal outstanding at termination

NEO Finance Investors

Provision fund

10

“NEO Finance” offers a „Provision Fund"

service, which allows investors to reduce their

investment risk. If a loan defaults – “NEO

Finance” guarantees to repay the investor with

all of its assets. During 2018 Q3 the service

covered 91 150 EUR.

For liquidity risk management, “NEO Finance” calculates the sufficiency of

funds to cover liabilities under “Provision fund“ and holds these funds in a

separate bank account. The purpose of this account is to ensure the company's

internal cash flow management. In order to fulfill its obligations to investors, the

company may, if necessary, use other assets of the company.

The fund's growth amounted to 22 020 EUR. At the end of 2018 Q3 there were

212 809 EUR of accumulated funds, and the total guaranteed amount was

1 882 290 EUR, resulting in 11% coverage ratio.

154

178191

213

0

50

100

150

200

250

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Provision fund, K EUR

1382

1557

1726

1882

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Guaranteed amount, K EUR

Buybacks

11

“NEO Finance” offers a buyback service. When an agreement with a borrower is terminated, investors have

an option to sell their investment for 50-80% of it‘s face value to “NEO Finance” . In 2018 Q3 investors sold

3 032 investments for 49 464 EUR.

15,490 €10,661 €

26,384 €

49,464 €

1082

693

1708

3032

0

500

1000

1500

2000

2500

3000

3500

0 €

10,000 €

20,000 €

30,000 €

40,000 €

50,000 €

60,000 €

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Buybacks

Buybacks, EUR Buybacks, units

Secondary market

12

Secondary market is a feature where investors can sell or buy investments. It allows investors to adjust their

risk exposure in pursuit of aggressive returns, or sell a nonperforming investment. It also provides liquidity

when an investor feels the need to cash out. During 2018 Q3 secondary market turnover was 123 259 EUR.

Average transaction was 16.84 EUR. A new auto-invest function was introduced in the secondary market in

August. The secondary market was not as active as in 2018 Q2 due to increased loan supply in the primary

market.

106,078 €118,408 €

179,184 €

123,259 €

5244

4506

5657

7321

0

1000

2000

3000

4000

5000

6000

7000

8000

0 €

20,000 €

40,000 €

60,000 €

80,000 €

100,000 €

120,000 €

140,000 €

160,000 €

180,000 €

200,000 €

2017 Q4 2018 Q1 2018 Q2 2018 Q3

Secondary market

Turnover, EUR Turnover, units

13

Main statisticsSince launch till the end of 2018

Q3

5348Active investors

4,082 €Average amount

invested

2,335,278 €Interest received

21,602,085 €Issued loans

Investments sold in

secondary market

727,336 € 14,927,696 €Outstanding principal