NEO Finance, AB
Sales report 2019Q3
Vilnius
2019-10-10
Management comments
2
2019 Q3 sales amounted to 5.12 million EUR of loans issued. Precisely planned TV
and online campaign together with affiliate campaign assisted in reaching such amount issued.
“NEO Finance” shares were listed on Nasdaq Vilnius First North market, dedicated to
fast growth potential small and medium companies. NEO Finance is the first Baltic fintech start-up
to enter the stock exchange.
An increasing number of lenders from all over Europe discovers consumer loans on
“NEO Finance” P2P lending platform. Number of foreign lenders are continuously growing faster
than Lithuanian. In 2019 Q3 the largest numbers of foreign lenders registered from Germany, Spain
and the Netherlands. Investors from the Netherlands surpassed investors from Estonia, who were
the third largest investor group in 2019 Q2.
2019 Q3 was successful providing Payment Initiation Service for Lithuanian e-shops
and service providers. Number of transactions exceeded 3 million in total. Moreover, starting with
September 14th, “NEO Finance” was the first and only company in Lithuania to provide Payment
Initiation Service with the most popular banks via the API (Application Programming Interface).
To meet the needs of our borrowers and lenders “NEO Finance” introduced an
upgraded Invite Your Friend referral programme.
Events
3
New referral programme introduced for
lenders;
September
Presentation in “Corporate Finance
2019” conference. This conference is
organized for the 7th time for the top
corporate finance executives;
Lenders from The Netherlands visit to
Lithuania and NEO Finance;
Seminar for lenders in Vilnius;
Social events
On September 14th, “NEO Finance” started
providing Payment Initiation Service via API;
New in-depth upgrades in “Portfolio Overview”
for lenders;
July
First “NEO Finance” community meet
up in Amsterdam;
Registration of new Articles of Association
allowing the Board of Directors to issue
bonds;
“NEO Finance” shares were admitted to
Nasdaq First North in August;
New feature, which allows “NEO Finance” to
sell its investments on the secondary market;
Management accounts
4
The vast majority of revenues related to P2P lending activities are distributed throughout the loan period. Management
accounts represent future intermediary fee income as the result of loans issued in specific quarter.
At the end of 2019 Q3 receivable intermediary fee amounted to 4.22 million EUR
* Intermediary 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. 414 thousand EUR is a result of 5,115 thousand EUR issued and will be received
throughout entire loan period.
2019 Q3 2019 Q2 ∆, % 2018 Q3 ∆, %
Loans issued,K EUR 5,115 4,549 12% 3,928 30%
Intermediary fee income, K EUR* 414 362 14% 282 47%
Intermediary fee / Loans issued
ratio8.1% 8.0% - 7.2% -
PIS income, K EUR 36 30 22% 5 562%
Other income, K EUR 367 318 15% 187 96%
Total income, K EUR 817 710 15% 474 72%
Payment Initiation Service (PIS)
5
Payment initiation service (PIS) means a payment service, where at the request of the payment service user, a payment
order is initiated from a payment account opened at the institution of another payment service provider. Payment initiation
service is an alternative to a bank transfer ("banklink" service) that is used for billing for goods or services at e-shops when
the payment initiation service is provided by a licensed broker. Using PIS e-shop makes payment faster, more convenient
and cheaper.
“NEO Finance” is a licensed payment initiation service provider which provides this service using the Neopay brand
trademark.
During 2019 Q3 “NEO Finance” clients made 867 654 transactions. Moreover, starting with September 14th, “NEO
Finance” was the first company in Lithuania to provide Payment Initiation Service with the most popular banks via the API
(Application Programming Interface). The transition to a new technological solution has gone smoothly and without major
disruption. Providing service through API interfaces is a very important milestone in the development of PIS.
132
533
734
808868
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
PIS transactions, quantity, thousands
P2P consumer loan market in Lithuania
6
In 2019 Q3 P2P consumer loan market size reached 9.42 million EUR. Compared to 2018 Q3 year on
year the issued loans volume grew by 36% from 6.90 million EUR. “NEO Finance” growth was 30%
in the same period. “NEO Finance” market share during 2019 Q3 was 54% with 5.12 million EUR of
loans issued.
Monthly amount of issued consumer loans through all Lithuanian platforms reached the peak of 3.24
million EUR in July. “NEO Finance” reached a record of 1.75 million EUR financed in July.
Compared to the same month in 2018, “NEO Finance” issued loans volume grew by 46%.
Source: Data from Lithuanian P2P lending platforms
1.51 1.45
1.22
1.46 1.431.60
1.511.63
1.41
1.751.65 1.71
2.49 2.39
2.16
2.67
2.94 2.79
2.91 2.76
2.66
3.24
2.97
3.21
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2018-10 2018-11 2018-12 2019-01 2019-02 2019-03 2019-04 2019-05 2019-06 2019-07 2019-08 2019-09
P2P consumer market, loans issued, million EUR
NEO Finance Market size
Refinancing
7
Out of 5.12 million EUR financed in 2019 Q3 – 1.93 million EUR was refinancing loans, meaning that
“NEO Finance” lenders helped these borrowers to reduce their instalment amount.
At “NEO Finance” borrowers can get a loan where a part of funds are for refinancing purpose and
additional amount is for consuming purpose. Refinancing is calculated without additional loan amount.
326 238 262
24 28 6
184 167 241
1,314
1,101
1,257
224
245
163
2,071
1,778
1,930
-
500
1,000
1,500
2,000
2,500
2019 Q1 2019 Q2 2019 Q3
Refinancing distribution, K EUR
Banks Credit Unions Operators of Peer-To-Peer Lending Platforms
Consumer Credit Providers (Ex-Leasing) Consumer Credit Providers (Leasing only)
Borrowers
8
In 2019 Q3 established brand and proven
acquisition strategy attracted 4 260 new
registered borrowers. At the end of 2019 Q3
the number of registered borrowers grew to a
total of 62 688. Compared to 2018 Q3, the
number of registered borrowers grew by 32%.
In 2019 Q3 the number of active borrowers grew
by 699 users. At the end of 2019 Q3 the number
of active borrowers reached a total of 7 368.
Compared to 2018 Q3, the number of active
borrowers grew by 51%.
47,338 51,147
54,993 58,428
62,688
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Registered borrowers
4,878
5,412
6,101
6,669
7,368
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Active borrowers
Lenders
9
In 2019 Q3 increasing number of international
partners and referral programme attracted 1 619
new registered lenders to a total of 14 593.
Compared to 2018 Q3, the number of registered
lenders grew by 73%. Cooperation with
publishers attracts an increasing amount of
foreign lenders.
Lenders have already earned 5.21 million EUR in returns.
In 2019 Q3 the number of active lenders grew
by 796. At the end of 2019 Q3 the number of
active lenders reached a total of 8 165.
Compared to 2018 Q3, the number of active
lenders grew by 53%. TOP 3 foreign countries
regarding new active lenders in the descending
order are Germany, Spain and The Netherlands.
8,417
9,515
11,078
12,974
14,593
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Registered lenders
5,348 5,755
6,590
7,369
8,165
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Active lenders
Lenders (Ex-Lithuania)
10
Registered lenders from outside Lithuania
during 2019 Q3 grew by 36% compared to the
same quarter last year. Registered lenders
during 2019 Q3 distribution by TOP 5 countries
is provided below:
Active lenders, who registered during 2019 Q3
distribution by TOP 5 countries is provided
below:
53%
17%
14%
10%
6%
Registered lenders distribution by country
Germany Spain Netherlands Portugal Italy
56%
17%
13%
10%4%
Active lenders distribution by country
Germany Spain Netherlands Portugal Austria
NEO Finance investments
11
“NEO Finance”, as a consumer credit provider, co-invests into loans together with lenders. A policy of
avoiding conflicts of interest is provided to every lender. In 2019 Q3 “NEO Finance” invested 624
thousand EUR. Invested amount saw an increase, as more borrowers approached “NEO Finance”
platform than ever, and amount issued reached a record of 5.12 million EUR.
Since the launch in December, 2015 “NEO Finance” investments into loans reached 3.90 million
EUR.
379
518
573
539
624
0
100
200
300
400
500
600
700
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
NEO Finance investments, K EUR
Overdue loans
12
At the end of 2019 Q3 out of 14 703 issued loans - 1 432 loans, or 9.74%, were overdue for more than 90
consecutive days. Respectively, out of 39.95 million EUR financed – 4.59 million EUR or 11.48% 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 2019 Q3 a record amount of 144 thousand EUR were recovered and
distributed to lenders.
In 2018 Q4 our debt recovery partners “Legal Balance” signed a contract with “EOS Holding GmbH”, therefore
enabling cross-border debt recovery.
3.13%
10.70%
22.25%
11.48%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
A rating B rating C rating Total
EUR, overdue >90 days, %.
80
64
90
111
144
0
20
40
60
80
100
120
140
160
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Amount recovered, K EUR
Recovery
13
Recovery is presented starting at 24 months after termination. The table represents initial amounts at
termination, while chart shows distribution between “NEO Finance” and lenders.
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 lenders.
Recoveries are calculated as follows: The oldest batch of terminated loans consists of 14 loans with 21 670 EUR
principal at termination. Next batch consists of 20 loans with 31 347 EUR principal at termination. The longest
period of recovery will represent only 14 loans with 21 670 EUR. Next period will represent 34 loans (14 from the
first batch and 20 from the second) and will reflect recoveries from a total of 53 017 EUR and etc.
Months after
termination
24 months 27 months 30 months 33 months 36 months
Principal at
termination€ 436,744 € 272,552 € 151,459 € 53,017 € 21,670
Loans, units 195 134 80 34 14
20.0% 21.1% 24.1% 24.7% 25.3%
47.3%58.3%
67.6% 67.9%75.4%
67.3%
79.4%
91.8% 92.6%100.7%
24 months 27 months 30 months 33 months 36 months
Recovery as % of principal outstanding at termination
NEO Finance Lenders
Provision fund
14
“NEO Finance” offers a “Provision fund“
service, which allows lenders to reduce their
investment risk. If a loan defaults – “NEO
Finance” guarantees to repay the lender with
all of its assets. During 2019 Q3 the service
covered 150 411 EUR.
For liquidity risk management, “NEO Finance” calculates the sufficiency of
funds to cover liabilities under “Provision fund“. Starting with 2019 Q3 a part of
the funds is invested into loans, whereas another part is held 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 lenders, the company may, if
necessary, use other assets of the company.
The fund's growth amounted to 79 842 EUR. At the end of 2019 Q3 there were
408 742 EUR of accumulated funds, and the total guaranteed amount was
3 075 237 EUR, resulting in 13% coverage ratio.
213 240296
329
187
222
213240
296329
409
0
50
100
150
200
250
300
350
400
450
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Provision fund, K EUR
Cash Invested amount
1882
2144
2454
2784
3075
0
500
1000
1500
2000
2500
3000
3500
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Guaranteed amount, K EUR
Buybacks
15
“NEO Finance” offers a buyback service. When an agreement with a borrower is terminated, lenders have
an option to sell their investment for 50-80% of it‘s face value to “NEO Finance” . In 2019 Q3 lenders sold
4 021 investments for 68 081 EUR.
49,464 € 47,432 €
60,769 €
69,149 € 68,081 €
30323169
3879
4784
4021
0
1000
2000
3000
4000
5000
6000
0 €
10,000 €
20,000 €
30,000 €
40,000 €
50,000 €
60,000 €
70,000 €
80,000 €
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Buybacks
Buybacks, EUR Buybacks, units
Secondary market
16
Secondary market is a feature where lenders can sell or buy investments. It allows lenders to adjust their risk
exposure in pursuit of aggressive returns, or sell a nonperforming investment. It also provides liquidity when
an lender feels the need to cash out. During 2019 Q3 secondary market turnover was 180 378 EUR.
Average transaction was 20 EUR.
123,259 €
102,577 €
182,581 € 180,565 € 180,378 €
7321
6244
11820
10620
8914
0
2000
4000
6000
8000
10000
12000
14000
0 €
20,000 €
40,000 €
60,000 €
80,000 €
100,000 €
120,000 €
140,000 €
160,000 €
180,000 €
200,000 €
2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3
Secondary market
Turnover, EUR Turnover, units
17
Main statisticsSince launch till the end of 2019
Q3
8,165Active lenders
3,129 €Average portfolio
5,209,444 €Interest received
39,950,071 €Issued loans
Investments sold in
secondary market
1,373,437 € 25,622,192 €Outstanding principal
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