Ü h i s l i i s i n g u P r e s e n t a t s i o o n

Estonian factoring success

Sven Randoja

24. October 2003

Warsaw

2

ESTONIA

Capital - Tallinn

Population - 1.4 million

Currency - Estonian Kroon (EEK)

Exchange Rate-

EUR 1= 15,646 EEK

GDP 6,9 bn EUR

Estonia

3

Estonian economyMacroeconomic highlights

CPI

GDP

1999 2000

-0.6% 7.3%

3.3% 4.0%

Exports ( € m, %) 2,238 3,443 (+54%)

Imports ( € m, %) 4,614 (+43%)

Trade deficit ( € m, %) -984 -1,171 (+19%)

CAD / GDP, % -4.7% -6.1%

Unemployment 12.3% 13.7%

2001

6.5%

5.7%

3,695 (+7%)

4,796 (+4%)

-6.2%

-1,101 (-6%)

12.6%

3,222

2002

6.0%

3.6%

3,633 (-2%)

5,077 (+6%)

-12.5%

-1,444 (+30%)

10.3%

2003E

4.7%

1.4%

4,000 (+10%)

5,635 (+11%)

-14.5%

-1,635 (+14%)

9.9%

FX rate EEK/EUR 15.65 15.65 15.65 15.65 15.65

GDP/capita (EUR) 3536 4059 4568 5060 5432

1994

-2.0%

47.7%

1,000

-284

-7,2%

7,3%

1,284

-

1290

4

Estonian economyFinancial sector

• Concentration• 50 banks in 1992

• 7 banks in 2003

• Foreign capital inflow• 86 % foreign investment

• SEB

• Swedbank

• Nordea

• Total corporate loans:• 270 mio EUR in 1994

• 2,68 bln EUR in 2003

• Intrest rate (short term average) • 24,3% in 1994

• 3,5% in 2003

• Stock exchange formed in 1996

5

Development of factoringmarketHistory of factoring market

• Started in 1994

• 3 players in the market • Hansa Leasing

• Ühisliising

• Bank of Tallinn

• Constant growth

• In 1998 Hansa Leasing joined FCI

• In 2002 Ühisliising started cooperation with Gerling NCM

6

1008,7

0

100

200

300

400

500

600

700

800

900

1000

1100

1998 1999 2000 2001 2002 2003E

Development of factoringmarket

Portfolio Turnover

169

0

20

40

60

80

100

120

140

160

180

1998 1999 2000 2001 2002 2003E

€ m € m

Source: Ühisliising

7

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

12,00%

14,00%

16,00%

Estonia Poland CzechRespublic

Italy UK

Development of factoringmarketMarket penetration

1,9%

3,5%

7,3%

11,0%

14,1% 14,0%

0,00%

2,00%

4,00%

6,00%

8,00%

10,00%

12,00%

14,00%

16,00%

1998 1999 2000 2001 2002 2003E

Factoring in Estonia - % of GDP % of GDP compare to other countries

8

Drivers of success

• Easy alternative financing instrument

• Promotion, good image

• Risk assessing easier

• Public sector projects

• Electronic data exchange

• No alternative for credit insurance

Development of factoringmarket

9

Factoring today

• Concentration• 5 players in the the market

• 2 players owns 90% of the market

• Hansa Leasing owns 60% of the market and Ühisliising 30%

• Steady growth

• More sophisticated• Electronic data exchange

• „Traditional factoring“ no more „investment projects“

• Share of total volume• Export 20%

• Domestic 77%,

• Tax and import 3%

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Factoring today

Public sector4%

Agriculture11%

Manufacturing17%

Wholesale57%

Construction11%

Wholesale and retail sale have been one of most rapidly grown business sectors in Estonia.

Source: Ühisliising 2003

Factoring by sector

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Factoring today

SME 28%

Start-up conpanies

2%

Corporate clients 70%

SME 80%

Start-up conpanies

7%Corporate

clients 13%

Factoring clients structure Factoring turnover by client group

Factoring clients

Source: Ühisliising 2003

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Factoring market outlook

• Steady growth in pace of economy growth

• More advanced technology• E-business

• Market stays concentrated

• Market enters credit insurance company

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Contact

Ühisliisingu AS

Tornimäe 2

10145 Tallinn

Estonia

Tel: +372 66 57 910

Faks: +372 66 57 987

e-post: sven.randoja@yl.ee