Home Credit a.s. – 2007 IFRS results for the 9 month period ended 31 December 2007: Gross loan book increased to CZK 11.7 billion
Brno, 03/13/2008
Home Credit a.s. ("HC"), rated Moody’s A3.cz, one of the leading providers of consumer finance products in the Czech Republic, announces its financial results for the 9 month period ended 31 December 2007 in accordance with International Financial and Reporting Standards (IFRS). Due to the change in HC’s accounting year end to 31 December, the financial statements reflect the 9 month period from 1 April 2007 to 31 December 2007."The period saw Home Credit further consolidate its position as one of the leading consumer finance providers in the Czech Republic. Further strong growth was experienced across all our products with credit cards and cash loans growing especially strongly. We have also increased our number of retail outlets to strengthen our distribution capabilities. Our strong market position and strengthened risk management procedures meant that we can look to the future with confidence and continue to capture the further growth in consumer lending in the Czech Republic despite highly competitive market conditions."
Erich Comor, HC Chief Executive Officer
HIGHLIGHTS
- Gross loan book has increased by 14% to CZK 11.7 billion compared to 31 March 2007.
- During 9 month period ended 31 December 2007, total assets have increased by 4% to CZK 11.1 billion.
- Net interest income for the 9 month period to 31 December 2007 of CZK 1,570 million resulted in a 3% increase compared to the net interest income for the 9 month period to 31 December 2006 (for the prior 12 month period ending 31 March 2007: CZK 2,043 million).
- Net profit for the period of CZK 362 million compared to CZK 298 million for the preceding reconcilable 9 month period (for the prior 12 month period ending 31 March 2007: CZK 484 million).
- Growth in the cash loan portfolio was particularly strong representing a 45% increase in cash loans granted during 9 month period ended 31 December 2007 to CZK 1,972 million.
- In the same period, credit card operations grew over 365% to over CZK 417 million contributing to further diversification of HC's products portfolio.
- HC's continued focus on risk management has resulted in the level of NPLs - as a percentage of the gross loan book - falling from 19.5% at 31 March 2007 to 18.4% as 31 December 2007.
- HC continues to expand its distribution network operating in over 5,000 retail outlets across the Czech Republic.
- In November 2007, Moody’s affirmed the National Scale Rating for HC at A3.cz.
BUSINESS
HC reported strong, profitable performance across all its main business lines in 2007 with an overall 17% increase in the level of new loans granted which rose from CZK 7.1 billion to CZK 8.3 billion – this is the first time HC has exceeded the CZK 8 billion level in the Czech market.
The consumer finance market in the Czech Republic has become an increasingly competitive and sophisticated market with number of internationally experienced institutions now operating in the market. HC’s long-term relationships with its retail partners continue to bolster growth with a 10% increase in POS loans granted (9 month period ended 31.12.2007: CZK 2,457 million, 9 month period ended 31.12.2006: CZK 2,235 million).
HC grew strongly in the cash loan and credit card market segments with an increase in loans granted for each segment for the 9 month period ended 31 December of 45% and 365% respectively. The average size of cash loans granted grew by 52% reaching CZK 32,400, while the amount of credit cards utilized reached CZK 25,000 after being introduced to HC’s product range just in the fourth quarter of 2006.
The revolving card market in the Czech Republic declined due to the availability of more flexible products. This was reflected by the reduction in HC’s net loan balance in revolving loans reducing from a 64% share in 2006 to a 47% share in 2007. Consequently, HC has responded to this by growing its credit card segment in order to capture consumers moving away from the revolving loan product. Going forwards it is expected that HC will focus more on growing this product rather than the revolving loan product.
RESULTS
Due to the change in HC’s accounting year end to 31 December, the financial statements reflect the 9 month period from 1 April 2007 to 31 December 2007 and compare these to the 12 month period ending 31 March 2007.
Net profit for the 9 month period ended 31 December 2007 amounted to CZK 362 million compared to CZK 298 million for the preceding reconcilable 9 month period ended 31 December 2006 and CZK 484 million for the prior year period ended 31 March 2007 respectively. The drivers for net profit are explained below.
Net interest income for the 9 month period ending 31 December 2007 was CZK 1,570 million, compared to CZK 1,522 million for the 9 month period ended 31 December 2006 and CZK 2,043 million for the year ended 31 March 2007. On a 9 month basis, the net interest income showed a modest 3% growth. The main reason for this was the lower effective interest rate available on products resulting in consumers’ switch from high yielding revolving cards to more flexible products, such as credit cards.
Administrative expenses amounted to CZK 667 million for the period, while the company maintained the cost/income ratio around 40%. HC increased number of retail outlets in operation, totalling 5,153, compared to 4,637 at the end of 31 March 2007; the number of employees of HC increased from 388 to 423.
Throughout the period HC has focused on improving its risk management and collection procedures which has resulted in this decrease. NPLs as a percentage of the gross loan book decreased from 19.5% as at 31 March 2007 to 18.4% as at 31 December 2007, while NPL coverage reached nearly 97%.
Following the three successful funding transactions in 2006, the funding requirements for HC in 2007 as well as 2008 have been fully covered.
You may contact us on:
Markéta Mühlhoferová
Head of Group Investor Relations
E-mail: muhlhoferova@ppf.cz
tel: +420 224 559 174
Press Inquiries:
Milan Tománek
Group Communication Manager
E-mail: milan.tomanek@homecredit.eu
tel: +420 224 559 573
Notes to Editors:
Home Credit a.s. ("HC") (Moody’s A3.cz) is one of the leading consumer finance providers in the Czech Republic. The company provides loans in the form of consumer loans, revolving loans, credit cards and cash loans. In 2007, the company granted loans in the combined principal of CZK 8.3 billion.
Companies of the Home Credit Group operate in the Central and Eastern European, Central Asian and the Far East consumer finance markets and as at year-end 2006, had granted loans in the combined principal of USD 2.7 billion. Home Credit Group maintains one of the leading positions in the consumer finance markets of the Czech Republic (Home Credit, since 1997), the Slovak Republic (Home Credit Slovakia, since 1999), the Russian Federation (Home Credit & Finance Bank, since 2002) and the Republic of Kazakhstan (Home Credit Kazakhstan, since December 2005). Home Credit Group also entered the Ukrainian and Belarusian market in 2006 (CJSC Home Credit Bank, Home Credit Finance and OAO Home Credit Bank respectively) and China (Home Credit Asia, December 2007).
The Home Credit Group is part of the PPF Group, which was established in 1991 and has interests in insurance and consumer finance, and provides sophisticated asset management services. During its 17 years in business, PPF Group has become an important international financial investor, managing assets of over EUR 8.7 billion as of 30 June 2007.
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03/13/2008
