Home Credit lender returns to profit, hits restart after COVID hit

Band Jason Hovet

PRAGUE, March 17 (Reuters)Czech firm Home Credit, one of China’s oldest consumer lenders and active in Eastern Europe and Asia, is looking to turn the page and return to profit after the coronavirus pandemic hammered loans and led to heavy losses in 2020.

The group announced a loss of 584 million euros for 2020 on Wednesday, although it said it posted a net profit of 35 million euros in the second half.

Loans are up again, with Home Credit branches in its nine markets issuing 47,900 loans a day on average in the fourth quarter, or about one every two seconds, compared to an average of 39,600 loans in the second quarter of the last year.

But the loans are smaller, with an average size reduced by half to 450 euros and an average maturity reduced to nine months, against 20.

“We were profitable in the second half of 2020. Volumes were up. Costs are down at the pace of the year, which is the result of a digitalization of our various sales channels. Costs of risk have also decreased,” said Jean, managing director of Home Credit. – Pascal Duvieusart said in a telephone interview.

“The key point is that COVID is behind it, that’s the key sentiment.”

Duvieusart saw a transition phase for the consumer lender – which scrapped plans for a Hong Kong IPO in 2019 – was beginning after its loan portfolio shrank to 12.7 billion euros a year last, against 20.2 billion euros.

He said a return to that level would take two years and a return to a net profit level of 400 million euros, as posted in 2019, would take a similar time.

Controlled by the PPF group of Czech businessman Petr Kellner, Home Credit counts China and Russia as its main business markets. It is also present in India, Indonesia, the Philippines, Vietnam, Kazakhstan, Slovakia and the Czech Republic.

Duvieusart said the markets were growing again but none stood out.

“2021 will definitely be profitable, not massively profitable but profitable,” he said, adding that he plans investments such as more digitization.

In China, he said, 96% of new customer acquisition is done digitally.

He said the world was not immune to the pandemic, but economic trends were improving. Digitization helped him adapt.

“So even if there is a lockdown, if the economy is going forward, we are able to win customers,” Duvieusart said.

(Reporting by Jason Hovet; editing by David Evans)

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