14 April 2020
How Aventus Group is responding to COVID-19? EXPLORE P2P interview with Andrejus Trofimovas, CEO of Aventus Group
One of the most popular P2P market overview channels Explore P2P asked Aventus Group, PeerBerry’s largest business partner, to answer questions, related on how COVID-19 impacts credit performance, liquidity, operations and solvency of P2P loan originators, who operates under Aventus Group name.
To date Aventus Group is considered to be one of the higher quality loan originators that are available to P2P investors. PeerBerry now is one of the largest European P2P platform, and Aventus Group is the largest loan originator on PeerBerry. Even if Aventus Group seems better placed than most, how are things going right now? And what’s the outlook for the rest of the year? These and other Explore P2P questions on how Aventus Group plans to safely navigate the company through the coming months answers Andrejus Trofimovas, CEO of Aventus Group.
Many of the loans on PeerBerry are Polish loans issued by Aventus group companies. What impact will the new laws in Poland capping fee levels have on Aventus? Does Aventus plan to keep issuing new loans in the country? What percentage of the loan portfolio of Aventus is in Poland? Are the loans issued after 1 April compliant with the new law?
On March 16 we have taken a solution to pause issuing new loans in Poland due to unclear situation with a new legislation which could cause even “credit holidays” for all debtors. From April 08 we have renewed issuing loans only for our existing clients with a very good credit history, but not for new, as new clients’ risk is always higher. New legislation was much better than we expected. From new things just lower interest rate cap was introduced. As profitability in Poland was very sensitive to risks and we can’t risk our or our investors’ money in a such unclear situation, we made more conservative decisions. 30% was the volume of Polish loan portfolio in total Aventus Group loan portfolio as for April 1st.
What is the liquidity position of Aventus? Are there any upcoming bond or other funding facility maturities in the next 3-6 months?
Aventus has no upcoming bond or other funding facility maturities in next 3-6 months. As for April 1st Aventus Group “body in good portfolio” (DPD less than 14 days, without any interests and penalties)+ cash on accounts was 38,8 million Eur; all liabilities were 18,8 million Eur; all changed currencies rates are included here as well. As you see extremely conservative calculation (other companies uses DPD 30 or more days, they include interests and penalties as well), shows Aventus Group having more than double dept coverage ratio, and this, as far as it is known for me, is one of the most healthy ratios on the market.
Aventus was profitable in 2019 but it now faces higher funding costs and increased default levels. Can it operate profitably in the current environment?
As the operating costs are decreasing now (we are paying back significant part of p2p dept, we’ve decrease marketing costs significantly, as no marketing is needed now for loan issuing), we are planning to work profitable in the future as well. For instance, March was one of the most complicated months for us, however we’ve managed to get approximately 0,8 million Eur monthly (!) profit in March. Preliminary 2020, Q1 Aventus result was 2,5 million Eur Net profit. We don’t have any doubt about profitability of our operations in 2020.
Aventus operates in Kazakhstan and Russia. What’s been the impact on Aventus following the large currency falls in those countries? Is Aventus expecting higher defaults as a result of macro issues in those countries (related to low oil prices)?
The most complicated situation is in Kazakhstan because of Government introduced “credit holidays”, however even in such circumstances we are managing to get approx. 50% of planned cash flow on time. The rest is just postponed for 3 months, which is not a critical for us at all.
In Russia situation is perfect, default rate is the same as before, we haven’t stop issuing loans there, and even have risen prices. Profits in Russia will be growing according to our forecasts, as lots of traditional banks customers are coming to get our loans now.
Currencies in KZ and RU have lost less than 20% during last 3 weeks which is not ok, but definitely not critical, when we are charging around 2% a day. All KZ and RU loans portfolios together are approx. 14% of the total Group’ loan portfolio.
How has the business adapted to the impact of COVID-19? What are you seeing in terms of customer payment behaviour over the last month?
We are extremely conservative Group in terms of any forms of risks, so in these circumstances we decided to slow down issuing volumes significantly until we understand when the current crisis is over. You are absolutely right thinking, that clients behaviour could be different in such situation, that’s why the best and most confident behaviour as we see in this situation now, is to pay back the biggest part of p2p dept, and restart more active lending in the beginning of May after situation is clear, and not to risk with issuing new loans. We are planning to pay back roughly 50-60% of all our liabilities by the middle of May.
This interview you can also find on explorep2p.com.