Finbond expects half-year earnings to fall 20%
The specialist lending company says the value of loans advanced during the period decreased by 33% compared to 2019
Specialist lending company Finbond, which expects earnings to fall more than 20% for its six months to end-August, said on Friday that the impact of the coronavirus has slowed lending.
The lender, which plays in the unsecured lending credit landscape in SA and North America, said the value of loans advanced during the reporting period decreased by 33% to R1.93bn compared to R2.87bn in the prior year.
In April, loans advanced were at R236.4m, representing a 47% reduction to that of April 2019.
Although volumes have been recovering since, they have been inconsistent, Finbond said.
Net unsecured loans and advances decreased 28% to R656.9m from R913.3m in 2019.
“The significant drop in loans advanced, or sales volumes, due to Covid-19 has resulted in less capital being granted, but with collections holding firm. This has led to an increase in surplus cash as unsecured loans and advances are essentially being converted into cash,” said Finbond.
However, the trend has already started to reverse slowly as sales volumes increase, a sign that the company has started to recover from the impacts of the pandemic, it said.
The company said that while it cannot yet forecast the extent of the impact on its full-year results, ending February 28 2021, lockdowns and other Covid-19 related restrictions on economic activity in the various regions in which the company operates, will continue to adversely weigh on the company.
“The recovery is under way, although it is highly uncertain how long it will take for consumer spending and credit markets to return to more ‘normal’ or ‘new normal’ levels,” the company said.
Total assets increased by 13% to R4.77bn, while turnover dropped by 28% to R935m from R1.29bn in 2019.
Earnings before interest, depreciation and amortisation decreased by 66% to R116.8m from a previous R340.5m.
Following several cost savings initiatives and restructurings, operational expenses have decreased by 8% to R709.9m.
Finbond's share price jumped 18.26% to close at R1.36 giving the company a market capitilisation of R1.2bn.
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