As part of Aventus Group companies are listing loans on the P2P investment platform PeerBerry, the investors’ community is interested to know how Aventus Group is responding to COVID-19, as it can have an impact on credit performance, liquidity, operations, and solvency of P2P loan originators, who operates under Aventus Group name.
One of the most popular P2P market overview channels, Explore P2P, asked Aventus Group to answer questions related to COVID-19’s impact on the business.
To date, Aventus Group is considered to be one of the higher-quality loan originators that are available to P2P investors. PeerBerry is now one of the largest European P2P platforms, 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 navigate the company through the coming months safely, 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 situations with new legislation, which could even cause “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 a 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 such an unclear situation, we made more conservative decisions. 30% was the volume of the Polish loan portfolio in the total Aventus Group loan portfolio as of 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 the next 3-6 months. As of April 1st, Aventus Group’s “body in the 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, the extremely conservative calculation (other companies use DPD 30 or more days, and they include interests and penalties as well) shows Aventus Group having more than double debt 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 a significant part of the p2p debt, we’ve to decrease marketing costs significantly, as no marketing is needed now for loan issuing), we are planning to work profitably in the future as well. For instance, March was one of the most complicated months for us; however, we 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 the profitability of our operations in 2020.
What’s been the impact on Aventus following the large currency falls in some 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 critical for us at all.
In other countries, the situation is normal; the default rate is the same as before, we haven’t stopped issuing loans there.
Currency in KZ has lost less than 20% during the last 3 weeks, which is not ok, but definitely not critical when we are charging around 2% a day.
How has the business adapted to the impact of COVID-19? What are you seeing in terms of customer payment behavior over the last month?
We are an 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 in thinking that clients’ behavior could be different in such a situation; that’s why the best and most confident behavior, as we see in this situation now, is to pay back the biggest part of p2p dept and restart more active lending at the beginning of May after the situation is clear, and not to risk with issuing new loans. We plan to pay back roughly 50-60% of all our liabilities by the middle of May.
This interview you can also find on explorep2p.com.