REG - ZAIM Credit Systems - Third quarter 2021 trading update

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15/11/2021 07:05

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RNS Number : 2979S  ZAIM Credit Systems PLC  15 November 2021

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For Immediate Release

15 November 2021

 

Zaim Credit Systems Plc

("Zaim" or the "Group")

 

Third quarter 2021 trading update

Another record-high quarter of loans issued

 

Zaim Credit Systems plc, the Russia focused fintech group, announces a trading
update from its wholly owned subsidiary, Zaim-Express LLC, ('Zaim-Express') in
respect of the third quarter of the financial year ended 31 December 2021.

 

Highlights( 1 ):

Fifth consecutive quarter of Strong Online Growth confirms Zaim's transition
to an Online Fintech Platform

·  Business growth continues to fit within Group strategy to increase the
market share whilst keeping a close eye on business profitability

 

·  The Group continued to trade profitably in Q3 2021 - the fifth
consecutive Quarter of Profitable Growth

·  Another record-high quarter with £6.8m loans issued - business growth of
196% vs. Q3 2020 and 8% vs. Q2 2021

·   Zaim's mobile application, launched in the previous quarter, has
already created a transformational new distribution channel making up 8% of
total loans issued in September - comparable to the loan amounts issued via
existing offline stores (11%)

With Zaim's online business channel now comprising 89% of total business
volume in Q3 2021 and continuing to be the main engine for growth, Zaim
considers that it has now successfully completed its objective to evolve from
a solely physical company to a predominately digital lending company.

 

Siro Cicconi, Zaim's CEO commented:

"I am pleased to report that the third quarter of 2021 became the fifth
consecutive quarter of profitable growth. Our operational results demonstrate
the effectiveness of the online-focused strategy that we employed in the
middle of 2020.

 

We are significantly overperforming a very fast-growing market: the Russian
microfinance market grew by 35% year-on-year ( 2 ,) whilst the amount of loans
issued by Zaim almost tripled ( 3 ). We are investing in growth, being careful
to maintain cash generation and profitability.

 

 

Quarter-on-quarter growth remains strong at 8%, lower than in previous
quarters due to a combination of a higher base effect and a deliberate
business decision to temporarily restrain growth and offerings to new clients
to improve profitability whilst technical improvements were made to Zaim's
loans platform in September.

 

Our branded mobile application, that we have launched in the previous quarter,
has become an important sales channel: since its launch we have issued over
£737k via the mobile application and over 44 000 people downloaded the app.
In September 2021, the amount of loans issued via Zaim's mobile application
reached 73% of the amount of loans issued via offline shops.

 

Management is also working on evolving the "Stores Network" into a Strategic
Business unit.  Despite the decrease of loans issued, our stores are still
profitable and are strategically located in densely populated areas. We are
launching in the coming months a set of fee based financial services that will
leverage the physical accessibility of our flagship stores and will improve
their profitability.

 

I am proud of the way our team has managed and addressed all the challenges
associated with the Group's strong growth while we were beginning to operate
in the online marketplace.

 

Our focus now is to seize the opportunity, as we are operating in a healthy,
transparent and rapidly growing market and to continue to outperform this
market. We see a significant opportunity in terms of value generation and
introduction of new services and products.

 

Our plans are now to accelerate the digitalization of the company in order to
target a broader market segment and much larger business volumes whilst
keeping operational costs low."

 

Third quarter 2021 trading update

The table below presents the two main KPI's (loans issued and default rate)
for the last five quarters:

 

 Quarter Ended                         Sept-20  Dec-20  March-21  June-21  Sept-21
 Loans Issued (£'000)                  2,307    3,812   5,109     6,332    6,830

 Loans Issued Growth Rate QoQ          42%      65%     34%       24%      8%
 Loans Issued Online (£'000)           1,153    2,889   4,308     5,564    6,097
 Loans Issued Online Growth Rate QoQ   205%     151%    49%       29%      10%
 Loans Issued Offline (£'000)          1,154    923     801       768      733
 Loans Issued Offline Growth Rate QoQ  (7%)     (20%)   (13%)     (4%)     (5%)
 Weighted Average Default Rate( 4 )    15.8%    17.7%   20,8%     24.5%    See note( 5 )

 

The Group continued to see growth in loans issued during the quarter with an
increase of 196% YoY and 8% QoQ, driven by growth in the online business.

The weighted average default rate increased to 24.5% in Q2 as a result of the
increase in the number of first-time customers which inherently have
statistically higher probability of defaults.

This increase in default levels is in line with the management expectations
and is a result of the strategy to maximise growth and gain as much market
share as possible. This is being diligently managed and is caused by the rapid
growth of online business and is not due to any deterioration of business
performance.

 

Notes:

1 According to the Central Bank of Russia's latest available data, growth of
the portfolio of microloans in Q2 2021 was 35% compared to Q2 2020

 

2 Loans issued by Zaim in Q3 2021 increased by 196% vs. Q3 2020

( )

(3) All figures presented throughout this announcement represent unaudited
management information taken from the internally generated management accounts
of Zaim-Express LLC

(4 )Default rate is defined as no payment received after 120 days of the
origination of the loan

(5 )Data is not yet available for the quarter ended 30 September 2021 as the
earliest time to determine default rates is 120 days after the end of the
period

 

Follow us on Twitter - @ZaimcreditSyst

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Enquiries:

 Zaim Credit Systems Plc
 Simon Retter

 Siro Cicconi                        Tel: +44 (0) 73 9377 9849
 Alex Boreyko                        Tel: +7 925 708 98 16

                                     investors@zaimcreditsystemsplc.com

 Investor Relations: Flowcomms Ltd
 Sasha Sethi                         Tel: +44 (0)7891 677441

                                     sasha@flowcomms.com (mailto:sasha@flowcomms.com)

 Adviser: Beaumont Cornish Limited
 Roland Cornish / James Biddle       Tel: +44 (0) 20 7628 3396

 Optiva Securities Limited
 Jeremy King / Vishal Balasingham    Tel: +44 (0) 20 3137 1902

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ("MAR").

 

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