Mobile consumer lender
Having listed in the Prime Standard segment of the Frankfurt Stock Exchange in February 2015, Ferratum Oyj (DE:FRU) intends to continue the strong customer, revenue and profit growth reported for H115 by servicing the growing demand for mobile consumer financial services. The company is expanding its product list and the number of countries where products are on sale. It will launch mobile banking in Q116 and younger products have yet to be launched in many territories where the Microloan product is available.
Growing product portfolio
Ferratum has five main products available in 22 countries: Microloans of €50 to €1,000 for 7-90 days (available in all 22); PLUS Loans up to €2,000 for 6-15 months (nine countries); Credit Limit, akin to an overdraft, (six countries); and FerBuy, online payments to merchants by instalments over 2-6 months, and a new SME lending business are both available in two countries. The company aims to provide loans within 15 minutes of submitting a successful application through its mobile app or via the website. Ferratum’s proprietary credit scoring system is constantly refined and updated, mitigating credit risk, and around 30% of first-time applicants are successful. The company’s original Microloan product generated €29.7m of revenue in H115, up 23% year-on-year, although growth in newer business lines reduced Microloans' share of revenue from 78% to 60% over the same period.
Geographic expansion
Ferratum’s geographic spread drives growth and diversifies risk. The company operates in all the Nordic and Baltic states (except Iceland), Germany, France, Spain and the UK; its Maltese banking licence enables it to operate as a lender throughout the EU. Further afield, Microloans are available in Canada, Australia and New Zealand with Turkey, Italy and Mexico the next targets. On entry to new territories, Ferratum has previously experienced significant initial revenue growth with a rise in loan impairments in the new territory, which falls away as bad debtors are written off and more business comes from repeat customers. Break even has usually been achieved within 12 months of entering a new country; over 30% EBIT margins are achieved in mature markets.
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