Fellow Finance Plc’s half year review 2021

FELLOW FINANCE PLC COMPANY ANNOUNCEMENT 27.8.2021 8:00 AM

Volume of intermediated loans has recovered to a growth path and we will start building a new innovative digital banking business 

1.1.−30.6.2021 summary

• Turnover was 5.5 million euros (5.8), decrease of 5.3%
• Profit of the reporting period was -0.1 million euros (-0.7)
• EBIT was 0.5 million euros (-0.1)
• EBIT margin was 9.7% (-0.9)
• Earnings per share (EPS) was -0.01 euros (-0.10)
• Intermediated loan volume was approximately 90.7 million euros (69.1)
• Intermediated loan volume grew 31% compared to the same time period in financial year 2020
• After the end of the reporting period, the company announced the conclusion of a combination agreement with Evli Bank Plc, which provides for an arrangement whereby Fellow Finance Plc will merge with the company that will continue Evli Bank’s banking services

CEO Teemu Nyholm: We returned to a growth path with volume of intermediated loans, implementation of our strategy is progressing and we will start building a new innovative digital banking business

During the first half of 2021, our volume of intermediated loans continued to grow steadily and recover from the recession caused by the 2020 corona pandemic. We exceeded the monthly volumes in intermediated loans which preceded the 2020 pandemic both in consumer and business financing at the end of the reporting period. As a result of the growth, our turnover grew in comparison to the second half-year period in 2020. The company’s profit remained slightly negative. Profitability was, as expected, affected by investments in new personnel and implementation of new products in accordance with our strategy and the temporary interest rate ceiling for consumer loans enacted in Finland as a result of the corona pandemic.

Out of our business segments, business financing, in particular, continued a strong and steady growth. We also embarked on a good growth path within Finnish consumer financing. Our volumes in intermediated loans on the overseas markets continued to be modest but we progressed as planned with projects to relaunch on the Polish and German markets during 2021: the interest rate ceiling enacted in Poland as a result of the corona pandemic ended in June and in Germany, the project to relaunch operations with a new banking partner are progressing. In accordance with our strategy, we are focusing our overseas operations and running down operations in Sweden and the Czech Republic. 

We implemented our renewed strategy, published at the end of year 2020, determinedly during the first half of the year. We launched our e-commerce payment solution in May and concluded significant cooperation agreements, which will enable us to offer our payment solutions in Finnish web stores to both consumers and businesses during autumn 2021. Our credit card project progressed as planned and we expect to be in a position to launch the card business during this year. We also launched a mobile application in August which will be a central service channel for our private customers going forward.

On the loan investor side, we invested strongly in institutional investors and are pleased to acknowledge that we gained several significant institutional investors to our peer-to-peer and crowdfunding platform during the first half of the year. We also succeeded in our strategic goal to increase the share of lower risk credits of our volume of intermediated loans. Credit risk management continues to be the cornerstone of our operations and we managed to   decrease credit losses pertaining to credits originated by our subsidiary Lainaamo Oy in comparison to year 2020. At the same time, we decreased our own balance sheet loan stock, which translated into reducing funding costs.

We announced the conclusion of a combination agreement with Evli Bank Plc following the end of the reporting period. As part of the arrangement, Evli Bank will separate its other business operations into a new company and Fellow Finance will merge with Evli Bank Plc which will continue the deposit banking operations. The company that will carry on the banking business will form Fellow Bank, which aims to launch a new digital, customer-oriented bank with solid capital adequacy in Finland, to serve both private and SME customers. The arrangement is intended to be completed and the banking business launched during the first half of 2022. We will set the business strategy for Fellow Bank in more detail, make preparations for the integration work with Evli Bank’s current organisation and implement required projects for commencing the banking operations during the second half of the year. We see a great opportunity within banking operations to offer our broad customer base more comprehensive services, thereby further broaden our customer base as well as service offering and, above all, significantly improve the profitability and competitiveness of our company through reduced funding costs enabled by deposit funding.  

We continued to invest in strengthening our human resources and will continue this through strengthened capabilities particularly within banking operations and risk management as part of the Evli Bank integration as well as new recruitments within business development, sales and marketing.

We believe that the banking operations together with the investments in new products in accordance with our current strategy will provide conditions for significant growth in the coming years.   

Further enquiries

Teemu Nyholm: CEO, Fellow Finance Plc, teemu.nyholm@fellowfinance.fi, tel. +358 50 577 1028

Certified advisor: Evli Bank Plc, tel. +358 40 579 6210

Fellow Finance Plc is a loan-based crowdfunding and peer-to-peer lending platform. The company’s mission is to transform the traditional financing and payments to direct transactions between people and businesses. Fellow Finance has intermediated consumer and business financing of more than 800 million euros in Finland, Sweden, Denmark, Germany, Poland and Czech Republic and served more than 950 000 customers. The company is regulated by the Financial Supervisory Authority of Finland as an Authorized Payment Institution and listed on the Nasdaq First North Growth Market Finland. www.fellowfinance.com.